Euro area: What do modest GDP growth and mixed inflation suggest? - Societe Generale

Resilience in the face of elevated energy prices and adverse summer weather underpins Societe Generale’s forecast for modest Euro area Gross Domestic Product (GDP) growth in 3Q26. The research team expects Spain to lead growth, ahead of France and Italy, while Germany’s economy remains flat. Inflation, meanwhile, is expected to follow different national trajectories, reflecting fuel support measures and varying exposure to natural gas prices.

Can growth stay resilient as inflation paths diverge?

"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. Know more.)