Eurozone Growth Holds Steady in Q4 2025

The euro area economy expanded by 0.3% in Q4 2025, confirming earlier estimates and matching the pace recorded in the previous three months. The data underscore the bloc’s resilience amid easing inflation and lower interest rates, despite headwinds from US trade tariffs on EU imports. Among the region’s largest economies, Spain delivered the strongest performance, with output rising 0.8%, supported by solid household consumption and fixed investment. The Netherlands followed with a 0.5% expansion, largely driven by exports. Germany and Italy each posted growth of 0.3%, while France lagged behind with a 0.2% increase. On an annual basis, Eurozone GDP grew by 1.3%, slightly easing from 1.4% in Q3. For the full year 2025, the GDP expanded by 1.5%, accelerating from 0.9% in 2024. Looking ahead, both the European Commission and the ECB expect growth to moderate to around 1.2% in 2026 amid persistent geopolitical tensions and trade policy uncertainty, before edging higher to 1.4% in 2027.

The Eurozone economy grew by 0.3% quarter-on-quarter in Q4 2025, matching the pace of the previous quarter and slightly above market expectations of 0.2%, according to a flash estimate. Among the bloc’s largest economies, Spain led the gains, the strongest quarterly growth in a year, surpassing expectations of 0.6%, supported by robust household consumption and fixed investment. The Netherlands expanded by 0.5%, driven primarily by exports. Germany and Italy each grew by 0.3%, both beating forecasts, while France grew 0.2%, as expected, marking its weakest quarterly pace since Q1 2025. On an annual basis, Eurozone GDP rose 1.3%, above expectations of 1.2%. For full-year 2025, the Eurozone economy expanded 1.5%, up from 0.9% in 2024 and surpassing the European Commission’s 1.3% projection. Looking ahead, both the European Commission and the ECB expect growth to moderate to 1.2% in 2026 amid geopolitical tensions and trade policy uncertainty, before rebounding slightly to 1.4% in 2027.

Eurozone GDP growth for the third quarter of 2025 was revised slightly higher to 0.3%, up from the preliminary estimate of 0.2% and above the previous quarter’s 0.1% expansion. The upgrade was driven by a rebound in fixed investment, which rose 0.9% compared with a 1.7% decline in Q2, and stronger government spending, up 0.7% versus 0.4% in the previous quarter. Inventory changes contributed an additional 0.1 percentage point to GDP. Household consumption growth eased slightly to 0.2% from 0.3%, while net exports subtracted 0.2 percentage points as imports rose 1.3% and exports grew more slowly at 0.7%. Among the region’s largest economies, Spain and France led the expansion with growth of 0.6% and 0.5%, respectively, followed by the Netherlands at 0.4% and Italy at a modest 0.1%. In contrast, Germany’s economy remained stagnant during the quarter.