Why the euro area Q3 GDP is strong

According to a preliminary estimate by Eurostat, the euro area economy grew by a strong seasonally adjusted 0.4% quarter-over-quarter in Q3. This is clearly above the consensus (0.2%.)

Economic growth accelerated in the third quarter compared to the second quarter (0.2%). Initial indications from national statistics offices show that private consumption in the euro area may have picked up.

Among the largest economies in the euro area, Germany (0.2%), France (0.4%) and Spain (0.8%) also surprised on the upside. Only Italy fell short of previous quarters and expectations with its growth in the third quarter (0.0%).

One-off effects drive GDP

However, growth in the third quarter is likely to have been driven by one-off effects. In France, for example, the Olympic Games in Paris boosted economic growth significantly in the third quarter. German GDP also surprised positively in the third quarter, but was revised downwards in the second quarter. Overall, Germany is therefore likely to have stagnated over the second and third quarters. In addition, the particularly volatile Irish GDP rose by a very strong 2.0% compared to the previous quarter. Excluding the contribution from Ireland, eurozone GDP rose by just 0.3%.

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