Euro Area Annual GDP Growth Slows

The Euro Area GDP expanded by 0.8% from the previous year in the first quarter of 2026, below expectations of a 0.9% growth rate and dropping from the 1.3% last quarter to mark the softest pace of expansion since the second quarter of 2022. The slowdown was aligned with the energy crunch from the Middle East following the outbreak of war in the region, which triggered surges in the cost of major energy goods since the start of March. Lower household consumption was noted among the largest economies of the bloc, with growth slowing for France (1.1% vs 1.3% in 2025Q4), Germany (0.3% vs 0.4%), Italy (0.7% vs 0.9%), and the Netherlands (1.2% vs 1.8%). Spain remained the outperformer in GDP growth, expanding 2.7% from the 2.6% last quarter.

The Euro Area economy grew 1.2% year-on-year in the fourth quarter of 2025, revised down from an initial estimate of 1.3%. The figure marks the slowest annual growth in more than a year, easing from a 1.4% expansion in the previous quarter. All spending categories showed slower growth: household spending (1.3% vs 1.4%), government expenditure (1.4% vs 1.5%), gross fixed capital formation (3.1% vs 3.3%), exports (2.4% vs 2.9%) and imports (3.9% vs 4.2%). Exports made the largest upward contribution (1.2 pp), followed by consumer spending (0.7 pp) and investment (0.7 pp). Among member states, Malta recorded the largest growth rate (6.4%), followed by Cyprus (4.5%). Germany expanded 0.4%, France 1.2%, Italy 0.8% and Spain 2.6%. For 2025 as a whole, Euro Area GDP grew by 1.4%, slightly less than early estimates of 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.

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 matching the preliminary estimate. 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 Cyprus (1.4%), France (1.1%), Belgium (1.1%), Estonia (1.0%), Austria (0.7%), Italy (0.8%), Germany (0.4%) and Slovakia (0.2%). 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.