The eurozone economy grew faster than anticipated in the final quarter of 2025, supported by rising consumption and investment, Eurostat reported on Thursday. The figures suggest the 350-million-strong bloc has weathered trade tensions with the United States, increased export competition from China, and ongoing instability along its eastern borders.
Economic output rose 0.3 percent compared with the previous quarter, above the 0.2 percent forecast in a Reuters poll, while annual growth reached 1.3 percent, slightly ahead of economists’ 1.2 percent projection. The data reflect consistent, if moderate, expansion throughout 2025, despite challenges in industry and exports, the eurozone’s traditional growth engines.
Spain led the bloc with a quarterly expansion of 0.8 percent. Germany, the eurozone’s largest economy, grew 0.3 percent, exceeding estimates of 0.2 percent and marking its strongest quarterly performance in three years. “Increasing new orders and falling inventories bode well for at least a soft turnaround in industry,” said ING economist Carsten Brzeski. Italy also beat forecasts with 0.3 percent growth, while France recorded a 0.2 percent rise, in line with expectations despite ongoing political uncertainty.
Ireland, however, acted as a statistical drag on the bloc due to a contraction in its multinational sector, largely a result of corporate tax arrangements rather than broader economic weakness.
Indicators suggest 2026 has started on solid footing. A recent sentiment survey showed unexpected gains across all major sectors, led by France and Germany. Industrial activity appears to be stabilising, households are gradually reducing historically high savings rates, unemployment remains near record lows, and inflation is holding around the European Central Bank’s 2 percent target.
Germany’s planned spending boost on infrastructure and defence is expected to contribute to growth later in the year, potentially ending three years of stagnation and providing support to other eurozone economies reliant on German suppliers.
Exports are unlikely to recover fully in the near term due to ongoing US tariffs, rising competition from China, and a weaker dollar, shifting the emphasis toward domestic and intra-European demand. Analysts say household consumption and intra-EU trade have sufficient reserves to sustain moderate growth, with projections placing annual expansion in the 1.2 to 1.5 percent range, consistent with the bloc’s potential output.
The combination of steady growth, stable inflation, and neutral interest rates provides the ECB with what economists describe as the “nirvana” of central banking, allowing it to maintain a steady policy stance unless unexpected shocks occur.
The eurozone’s resilience demonstrates that the bloc can maintain modest growth despite global uncertainties, driven by domestic demand and investment while awaiting a potential revival in exports in the longer term.
