Euro Area GDP Q3 2021

Euro Area: Second release confirms GDP continued to expand solidly in Q3

November 17, 2021

A second reading confirmed that the Euro area economy grew a seasonally-adjusted 2.2% over the previous quarter in Q3, slightly up from Q2’s 2.1% expansion and beating market expectations of a softer rise. Compared with the same quarter of the previous year, seasonally-adjusted GDP increased 3.7% in Q3, following the 14.2% jump recorded in Q2, which had benefited from a very favorable base effect.

The quarterly increase came amid supportive fiscal and monetary stances, and as Covid-19 containment measures were eased further throughout the currency union alongside the vaccine rollout. This boosted business activity, especially in the services sector, and household spending. In terms of individual countries, France’s economy expanded 3.0% over the previous quarter, Italy’s GDP increased 2.6% and Spain’s economy grew 2.0%. Output in Germany rose 1.8%, significantly restrained by semiconductor shortages.

Commenting on the short-term outlook, Bert Colijn, senior Eurozone economist at ING, stated:

“From here on, do expect moderation though. The first rebound effects are waning, which will lead to naturally slower GDP growth. Besides that, input shortages and supply chain problems are adding to manufacturing woes, which have become broader based in recent months. From the consumption side, headwinds from soaring inflation—at 4.1% and matching the highest rate seen this century—are set to dampen prospects for the services recovery although a strong labour market and a high level of savings will support ongoing growth. This recovery phase has surprised quite a few times so far but will start to fade more substantially from here on.”

The economy is seen expanding 4.3% in 2022, which is down 0.1 percentage points from last month’s forecast. In 2023, GDP is seen increasing 2.2%.


Author: Massimo Bassetti, Senior Economist

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