The Eurozone’s GDP grew at a quarter-on-quarter rate of 0.4% in Q3 2024. This was up from 0.2% in the second quarter. The growth marks the strongest performance seen in the last two years. Household spending and higher government spending drove the increase. Inventory levels also supported the economic recovery.
Net trade limited the gains slightly. Imports rose by 0.2%, while exports fell by 1.5%. On a year-on-year basis, the Eurozone’s GDP grew by 0.9% in Q3, up from the second quarter’s 0.5%.
Policymakers React to Growth Trends
Kyle Chapman, FX markets analyst at Ballinger Group, explained the significance of these results. He said this growth supports policymakers leaning toward a 25bps rate cut instead of 50bps. He also pointed to challenges like soft PMIs and political instability in France and Germany as risks for the future.
Ireland’s quarterly GDP showed an outlier performance, with a growth of 3.5%. This volatility affects overall Eurozone trends but highlights regional differences.
Germany Avoids Recession While Spain Stays Resilient
Germany’s GDP grew by 0.1% in Q3 2024. Though below expectations of 0.2%, Germany avoided a recession. However, it continues to face challenges like falling competitiveness, weaker consumer sentiment, and high energy prices. Economic and political uncertainties, along with competition from Chinese manufacturers, added pressure.
The Netherlands’ economy shrank to 0.8% in Q3, down from 1.1% in the previous quarter. This was mainly due to weak export growth and tight labor markets.
The Italian economy struggled, too, due to falling net exports and a weakening manufacturing sector. Business and consumer confidence also dampened economic recovery in Italy.
Conversely, Spain’s economy grew by 0.8% in Q3, maintaining the same growth rate as the previous quarter. Strong labor market conditions, high consumption, and strong tourism contributed to this growth. France’s economy grew by 0.4%.