Euro Zone Growth Slows to 0.4% in Third Quarter as French Economy Shrinks

Economic expansion across the 21-nation euro zone slowed down to 0.4% in the third quarter. Figures published by Eurostat show the region decelerated from a 0.6% pace in the second quarter. Despite the slowdown, the result beat analyst expectations, which had projected an increase of just 0.2%.

Uneven Performance Across Member States

The broader regional expansion hid sharp differences between key European economies. France saw its economy contract by 0.1% between July and September. The drop comes as the nation faces high borrowing expenses, heavy national debt, and widespread public protests over the cost of living.

Other major members showed sluggish or mixed results:

• Germany expanded by 0.2% during the quarter.
• Italy recorded flat economic performance.
• Spain outpaced the regional average with 0.6% growth, supported by strong tourism, labor productivity, and internal consumer demand.
• Ireland posted a 5.5% expansion, though these numbers often see sharp revisions due to foreign multinational accounting.

Central Bank Policy and Future Headwinds

The European Central Bank recently decided to keep interest rates unchanged. Policymakers stated that elevated energy prices have not yet spread widely through the rest of the economy, but they noted that risks to growth are tilting downward. Market analysts believe another interest rate hike remains possible before the end of the year.

Economists warn that broader structural hurdles remain unresolved. Weak business investment, aging populations, and falling industrial competitiveness continue to limit long-term expansion across the bloc. Ongoing conflicts that push up fuel and transport costs could also renew inflation pressures and strain household budgets.