By Ahmed Abdelsalam
Europe's economy expanded moderately in the third quarter, shrugging off higher oil prices from the U.S.-Iran conflict, with gross domestic product rising 0.4% from the previous quarter, according to data released Friday by Eurostat for the 21 countries using the euro. The increase surpassed the 0.2% growth forecast by market analysts.
Growth Beats Forecasts
On a year-over-year basis, the eurozone economy grew 1.3% in the July-September period. Economists said the figures indicate households and businesses have not cut spending despite the geopolitical turmoil. Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, noted the resilience, while Paolo Grignani, senior economist at Oxford Economics, warned of worrying signs that higher oil prices are spreading to other sectors.
Inflation and Rate Outlook
Inflation remains at 3.8%, above the European Central Bank's 2% target. The ECB left interest rates unchanged at its Thursday meeting but may raise them in December to cool inflation, which would increase borrowing costs even as growth stays modest and uneven across member states.
Mixed Performance Across Members
Germany, the largest euro economy, grew 0.2% despite high energy prices and low river levels disrupting commerce. France contracted 0.1% as political deadlock over its budget deficit weighs on confidence. Spain, the Netherlands and Estonia each posted 0.6% growth.
Ireland Distorts Aggregate Figure
The overall eurozone figure was skewed by a 5.5% surge in Ireland, where volatile data reflects the presence of multinational tech and pharmaceutical firms. Excluding Ireland, eurozone growth was 0.2%.
