Eurozone Growth Revised Higher, Supporting Case for ECB Pause

The eurozone economy expanded slightly faster than initially estimated in the third quarter, a development that reinforces expectations the European Central Bank will keep interest rates on hold in the near term.

Revised Eurostat data released Friday showed that GDP in the 20-country bloc grew 0.3% quarter-on-quarter between July and September — an improvement on the earlier estimate of 0.2%. On an annual basis, growth eased to 1.4% from 1.5% in the previous quarter.

Analysts at ABN Amro described 2025 as “a year of resilience and hope” for the eurozone economy, noting that activity has held up despite multiple headwinds, from weak global demand to geopolitical uncertainty.

ECB likely to stay on hold

The ECB has delivered 200 basis points of rate cuts since mid-2024 to support growth, but policymakers have opted to keep rates steady since June as inflation has retreated close to target. The stronger-than-expected GDP reading reinforces the bank’s cautious approach and reduces pressure to ease further in the short term.

Germany’s recovery remains fragile

Fresh projections from the German Economic Institute (IW) underscore a mixed picture for the eurozone’s largest economy.

The IW expects:

• 0.1% growth in 2025 after two consecutive years of contraction
• 0.9% growth in 2026, marking a modest acceleration

Chief economist Michael Groemling said Germany is “emerging somewhat from its state of shock,” though exporters still face challenges from slowing global trade and weak external demand.

The revised eurozone data, however, suggests that while the region is not booming, it continues to show gradual, steady improvement, giving the ECB room to maintain its current policy stance into early 2026.