Euro Area GDP Annual Growth Beats Forecasts at 1.3%

The Euro Area economy expanded by 1.3% year-on-year in the final quarter of 2025, marking its slowest pace in a year but easing only slightly from 1.4% in the previous quarter and exceeding market expectations of 1.2%, according to preliminary estimates. Among member states with available data, Ireland posted the strongest growth at 6.7%, followed by Spain (2.6%), Lithuania (2.5%), Portugal (1.9%) and the Netherlands (1.8%). More moderate growth was recorded in France (1.1%), Belgium (1.1%), Estonia (1.0%), Austria (0.7%), Italy (0.8%) and Germany (0.4%). Finland’s economy was flat over the period. For 2025 as a whole, Euro Area GDP grew by 1.5%. Looking ahead, both the European Central Bank and the European Commission forecast economic growth of 1.2% in 2026, followed by 1.4% in 2027.

Eurozone GDP grew 1.4% year-on-year in the third quarter of 2025, compared to the 1.6% expansion recorded in both the first and second quarters, and broadly in line with the previous estimate. A slowdown was seen in household expenditure (1.1% vs 1.6%) and investment (2.5% vs 3.2%) while faster growth was recorded for government spending (1.7% vs 1.5%), exports (2.7% vs 0.5%) and imports (3.6% vs 2.7%). Spain led the major economies, expanding 2.8% (vs 3% in Q2), followed by the Netherlands at 1.6% (vs 1.7%) and France at 0.9% (up from 0.7%). Italy GDP growth was faster (0.6% vs 0.5%) and in Germany remained steady at 0.3%. GDP growth rate was also unchanged in Belgium at 1%. Compared to Q2, the Eurozone economy expanded by 0.3%, up from 0.1% in Q2 and better than 0.2% in the initial estimates.

The Eurozone economy grew 1.4% year-on-year in the third quarter of 2025, slightly higher than 1.3% in the first estimate and compared to 1.5% in the second quarter. Spain led the major economies, expanding 2.8% (vs 3.1% in Q2), followed by the Netherlands at 1.6% (vs 1.7%) and France at 0.9% (up from 0.7%). Italy and Germany remained steady at 0.4% and 0.3%, respectively. Meanwhile, the Irish economy jumped 12.3% (vs 18%) and faster growth was recorded in Belgium (1.1% vs 1%), Estonia (0.9% vs 0.5%), Austria (0.6% vs 0.5%), Portugal (2.4% vs 1.8%), Slovenia (1.6% vs 0.9%), Slovakia (0.9% vs 0.7%) while the Cyprus GDP expanded 3.6%, the same as in Q2. On the other hand, a slowdown was seen for Lithuania (1.9% vs 3.2%) and the GDP in Finland contracted 0.9%, following a flat reading in Q2. Compared to Q2, the Eurozone economy expanded by 0.2%, up from 0.1% in Q2 and in line with the first estimate.