The euro zone economy grew faster than predicted last quarter, official data showed on Friday, remaining resilient to headwinds from expensive energy as investment and consumption held up, Reuters reported from Frankfurt.

Source: Reuters

Gross domestic product in the 21-nation euro area rose 0.4 per cent in the third quarter compared with the previous quarter, according to Eurostat's preliminary flash estimate — slowing from an exceptionally strong 0.6 per cent in the second quarter, but well above the 0.2 per cent expected in a Reuters poll of economists. Compared with a year earlier, the economy expanded 1.3 per cent, beating expectations of 1.1 per cent. Across the wider 27-nation European Union, GDP rose 0.5 per cent on the quarter and 1.5 per cent on the year.

Source: Eurostat

+0.4%Euro area GDP, Q3 quarter-on-quarter
+1.3%Euro area GDP, year-on-year
+5.5%Ireland, the fastest quarterly growth
-0.1%France, which contracted in Q3

Ireland did much of the heavy lifting

Friday's figures were skewed by Ireland's exceptional 5.5 per cent quarterly growth, which is large enough to lift the whole euro zone figure on its own. Eurostat flagged the Irish estimate as experimental and said particular care should be taken in interpreting it, because Ireland's headline GDP is highly volatile due to the large multinationals based there. Among the biggest economies, Germany expanded 0.2 per cent, Spain and the Netherlands grew 0.6 per cent, Italy was unchanged, France contracted 0.1 per cent and Lithuania fell 1 per cent.

The resilience comes with a difficult backdrop. Energy prices have surged again amid the Middle East war, euro zone inflation is running at 3.8 per cent — nearly twice the European Central Bank's 2 per cent target — and the ECB held interest rates steady on Thursday while hinting that a further hike could come in December. A separate ECB survey published on Friday showed companies bracing for higher wage demands after the cost-of-living surge.

Eurostat stressed that the flash estimate is based on data from 19 member states covering 96 per cent of euro area GDP, that the underlying sources are incomplete, and that the figures may be revised. Its next estimate for the third quarter is scheduled for 13 November.