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The
figure released Friday for the 21 European Union member
countries that use the euro currency was better than the 0.2%
expected by market analysts. Compared to the same quarter a year
ago, the economy of the 21 countries using the euro grew by 1.3%
in the July-September period, according to EU statistics agency
Eurostat.
The continued growth shows that “households and businesses have
not pared back their spending due to the Iran war,” said Jack
Allen-Reynolds, deputy chief eurozone economist at Capital
Economics.
“All in all, the eurozone economy remains resilient amid
geopolitical turmoil and a worsening inflationary environment,”
wrote Paolo Grignani, senior economist at Oxford Economics.
That is despite “worrying signs” that higher oil prices are
spreading to other sectors. Those so-called second-round effects
— where high oil prices start to influence wages and prices
throughout the economy — would support higher interest rates
from the European Central Bank.
Inflation of 3.8% remains above the 2% target set out by the ECB,
which left rates unchanged at its policy meeting Thursday. That
means the ECB may raise rates at its next meeting in December to
cool inflation, imposing higher borrowing costs on the economy
even as growth remains modest and unevenly distributed among
member countries.
Germany, the largest of the euro economies, saw growth of 0.2%
despite headwinds from high energy prices and low river levels
that disrupted commerce. France, however, shrank by 0.1% as a
political deadlock over how to address an outsized budget
deficit continues to weigh on business confidence. Stronger
performers were Spain, the Netherlands and Estonia with 0.6%
The eurozone growth figure was distorted by an increase of 5.5%
in Ireland, where figures are volatile because it is host to
multinational tech and pharmaceutical companies whose global
activities can influence the figures. Excluding Ireland, growth
was 0.2%.
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