Euro Area: The economy expands at a softer pace in Q3
The economy grew 0.2% in seasonally adjusted quarter-on-quarter terms in Q3, below Q2s 0.8% expansion. Compared with Q3 2021, seasonally adjusted annual GDP increased 2.1% in Q3, following the 4.3% rise recorded in the previous quarter.
The quarterly deceleration came on the back of soaring inflation and energy prices, rising interest rates and souring business and consumer sentiment amid the war in Ukraine and a worsening global economic outlook. In terms of individual countries, Italys economy expanded 0.5% over the previous quarter in Q3, Germanys GDP increased 0.3% and Frances and Spains economies grew 0.2%.
Commenting on the outlook, Bert Colijn, senior Eurozone economist at ING, stated:
“Consumer confidence is near historical lows as real wage growth is at a multiple-decade low at the moment. This weighs substantially on the consumption outlook, as retail sales have already been trending down over recent quarters. The reopening of economies boosted services, but that effect is now fading. With interest rates up and the economic outlook uncertain, investment expectations are weakening too. We therefore still expect the economy to contract over the coming quarters.”