This is a positive surprise, and it deserves to be highlighted in the current context: according to initial estimates, growth in the Eurozone in the third quarter was higher than expected.
Furthermore, this better performance was driven by France, whose growth rate – higher than expected – was close to that of Spain (whose growth rate was in line with expectations). On the other hand, Germany and Italy remained stagnant, disappointing our forecast of slightly positive growth.
While the overall result is encouraging, there remains significant disparity between countries. Spain continues to outperform its partners, while Germany continues to underperform.
As for France and Italy, following the post-Covid rebound, which was more pronounced in Italy, France has regained the lead since the end of 2022, with higher average quarterly growth.
The other good news is that the economic situation in the Eurozone is likely to continue to improve, given the general uptrend in confidence surveys conducted among businesses and households through October.
The improvement remains modest, but it concerns the “big four”: Germany, France, Italy, and Spain. And the fact that the recovery in business confidence is more pronounced in Germany reinforces the overall positive signal.
The stability of the unemployment rate at a low level is another favorable factor in the Eurozone's economic picture.
Is this new momentum merely cyclical, or does it mark the beginning of a more structural recovery? It is still too early to say, but we are optimistic and believe that a strengthening of Eurozone potential growth is in progress.
Admittedly, in the short term, this positive view and outlook could be offset by a possible downturn in French growth at the end of the year, which is likely to suffer from the current political and fiscal uncertainty.
This positive view and outlook for the Eurozone is also tempered by the comparison of recent growth dynamics with the United States, which highlights Europe's underachievement. Indeed, despite the tariff shock, the AI boom, the wave of associated investments and the stock market ebullience are indeed fueling US growth much more than in Europe.
But the picture is not entirely negative for Europe. This is evident, for example, in a recent competitiveness ranking compiled by Eight Advisory.
This ranking reveals that European countries occupy the top seven places, while the United States is ranked 19th (out of a sample of 58 countries), two places behind France.
This ranking shows that economic power is not everything: the three other major pillars (social cohesion, education, and environmental sustainability) are also decisive, and Europe is in a good position to capitalize on these criteria.
Furthermore, faced with numerous challenges, Europe is moving from recognition to action. Admittedly, it is moving slowly, but it is moving in the direction of strengthening European economic fundamentals.
At the same time, European rearmament efforts and Germany's massive investment plan are gradually taking shape and supporting growth. Another positive factor for the Eurozone is inflation, which has returned close to target and allows ECB monetary policy to be in a “good place.”
Overall, unlike in the United States, where protectionism and tougher immigration policies pose a significant downside risk to US growth, in Europe, and in the Eurozone in particular, the most likely scenario seems to us to be one of accelerating growth. Thank you for your attention and for watching this new issue of EcoTV.
