France Among Worst Performers, Spain Still Strong While Germany Rebounds: Eurozone Growth Hits 0,4% in Q3

After 0.6% in the second quarter, growth in the euro zone reached 0.4% between July and September, according to Eurostat data published this Friday. A slowdown certainly, but less pronounced than what analysts expected (0.2%). “Despite persistent inflationary headwinds, the eurozone's result was stronger than expected,” said Liam Daly, an economist at CEBR, an economic study and research center.

“The eurozone economy seems to ignore the crisis in the Middle East,” Bert Colijn also noted. But, he added, "most major euro zone economies recorded weaker quarterly growth in the third quarter" than in the previous quarter. Even if the detailed results are not yet known for all of the 21 member states of the euro zone, one thing is certain: France is one of the bad students.

With a contraction of its GDP of 0.1% in the third quarter, France is at this stage in penultimate place, just ahead of Lithuania (-1%). Earlier this Friday, INSEE revealed the surprise decline in French activity in the third quarter while the institute expected an increase of 0.1%. Main cause: investment which fell further under the effect of the rise in interest rates and probably the climate of uncertainty linked to political instability.

But above all foreign trade, with a marked drop in exports in aeronautics and in the agricultural sector. “The French economy is at a standstill,” recognized French Minister of the Economy Roland Lescure. Household consumption (+0.4%), on the other hand, held up despite the return of inflation.

Spain confirms its good health Nevertheless, the French situation contrasts with that of its neighbors. On a European scale, Ireland is doing the best with growth of 5.5% in the third quarter. Let us remember, however, that the Irish case is special because the GDP of the cloverleaf country, very dependent on the results of the multinationals established on its soil, can fluctuate significantly each quarter in one direction or another.

Apart from Ireland, Spain maintains its position as the "economic engine" of Europe with growth of 0.6%, like the Netherlands and Estonia. Since the end of the Covid crisis, our neighbor has experienced strong momentum thanks to its vigorous domestic demand, despite high inflation in the country, which is partly offset by government aid to households. To respond to staff shortages in several sectors of activity, Spain has mainly called on hundreds of thousands of foreign workers, mainly from America, which has boosted employment and supported demand.

In the spring, the executive also announced a massive regularization plan for undocumented immigrants: nearly 1.2 million applications were submitted. Germany is finally rebounding France is also far behind its German neighbor, which is doing better than expected with growth of 0.2% in the third quarter. According to the Federal Statistical Office, the German economy was boosted by increased government and household spending which offset falling exports.

Machine-translated from French