The eurozone economy continued to expand in the third quarter of 2026, with growth remaining ‘well above trend’ despite higher energy costs and uncertainty linked to the Middle East conflict, according to an analysis by ING.
ING chief economist Bert Colijn said that the eurozone economy ‘seems to have shrugged off the Middle East crisis’, with GDP increasing by 0.4% between July and September, down from 0.6% in the second quarter.
‘In fact, growth has accelerated markedly since the war began at the end of February, a seemingly counterintuitive development for a major energy importer,’ Colijn noted.
‘Then again, the impact on inflation has been mild so far and real wage growth is still positive. Industry is increasingly feeling the effects of higher energy costs, but is also benefiting from the tech boom and increased defence and infrastructure spending.’
Ireland leads the way
Ireland recorded GDP growth of 5.5% in the third quarter, the strongest increase among the EU member states for which data were available – however, ING said the figure was heavily influenced by multinational activity and was less representative of underlying economic conditions.
Growth across other major eurozone economies was more limited. France’s GDP contracted by 0.1%, while Italy’s economy stagnated. Spain and the Netherlands both recorded quarterly growth of 0.6%, down from 0.7% in the previous quarter. Germany’s economy expanded by 0.2%, compared with 0.3% in the second quarter.
As a result, if Ireland is excluded, eurozone growth was approximately 0.2%, according to ING.
Defying gravity
Looking ahead, Colijn identified rising energy prices, including gas, as a challenge for European economic activity during the winter months.
‘On top of that, interest rates are now higher and businesses indicate less appetite for borrowing as a consequence, according to the ECB bank lending survey,’ he commented.
‘The eurozone economy has continued to experience decent growth for now, but these factors will still weigh on growth. Taking the Irish volatility out of the mix, a modest growth rate is what can be expected in the months ahead.’ Read more here.
