Euro area posts modest GDP growth as inflation presents a mixed picture - Societe Generale

Modest growth in euro area Gross Domestic Product (GDP) in 3Q26 is expected by Societe Generale’s research team, suggesting that the economy remains resilient despite elevated energy prices and unfavourable summer weather. In the bank’s country forecasts, Spain is set to lead growth, ahead of France and Italy, while German activity is expected to remain flat. National inflation trends are also expected to diverge, reflecting fuel support measures and differences in exposure to natural gas prices.

Growth holds up as inflation trends diverge

"The focus will be on the flash release of euro area GDP for 3Q26. We expect it to show growth of 0.2% qoq and 1.1% yoy, underscoring the theme of resilience in the face of persistently high energy prices across the bloc, but also reflecting adverse weather effects during the summer months."

"At the country level, we expect Spain to continue to outperform (+0.6% qoq), followed by France (+0.2%) and Italy (+0.1%), while activity should be flat in Germany."

"On the inflation front, all four major euro area countries will publish their flash inflation estimates."

"On the downside, both Germany (3.3% yoy to 3.0% yoy in October) and Spain (5.0% yoy to 4.7% yoy in October) should benefit from fuel support measures coming into effect."

"Conversely, Italy's high exposure to rising natural gas prices means we expect inflation to increase by 0.5pp to 4.7% yoy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)