Euro area: Modest GDP expansion, mixed inflation signals - Societe Generale

3Q26 euro area Gross Domestic Product (GDP) growth is expected to be modest. Societe Generale’s research team sees the economy remaining resilient despite high energy prices and adverse summer weather. Its national forecasts put Spain ahead of France and Italy, while Germany is expected to record no growth. Fuel support measures and varying exposure to natural gas prices are also expected to drive divergent inflation trends across countries.

Resilient Growth, Divergent Inflation Paths

"The focus will be on the flash release of euro area GDP for 3Q26. We expect it to show growth of 0.2% qoq and 1.1% yoy, underscoring the theme of resilience in the face of persistently high energy prices across the bloc, but also reflecting adverse weather effects during the summer months."

"At the country level, we expect Spain to continue to outperform (+0.6% qoq), followed by France (+0.2%) and Italy (+0.1%), while activity should be flat in Germany."

"On the inflation front, all four major euro area countries will publish their flash inflation estimates."

"On the downside, both Germany (3.3% yoy to 3.0% yoy in October) and Spain (5.0% yoy to 4.7% yoy in October) should benefit from fuel support measures coming into effect."

"Conversely, Italy's high exposure to rising natural gas prices means we expect inflation to increase by 0.5pp to 4.7% yoy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)