The Eurozone economy grew by 0.4% quarter-on-quarter in Q3 2024, marking its strongest growth rate in two years. This performance aligns with earlier estimates and improves upon the 0.2% rise seen in Q2. The growth was driven primarily by household spending, which increased by 0.7%, alongside a significant 2% rise in gross fixed capital formation and positive contributions from inventories. Government spending also played a role, increasing by 0.5%. However, trade posed a challenge, as exports fell by 1.5%, while imports inched up by 0.2%, dampening net trade’s contribution to overall growth.

Mixed Performances Among Major Economies

Among the Eurozone’s largest economies, Germany narrowly avoided a recession, with GDP expanding by 0.1%, though this was slightly below the 0.2% initially estimated. France outperformed expectations with a robust 0.4% expansion, while Spain showcased resilience with a strong 0.8% growth rate. In contrast, Italy’s economy stalled, failing to register any growth, and the Netherlands saw a significant slowdown, matching Spain’s 0.8% growth rate but with less momentum than previous quarters. These varied performances reflect the differing economic dynamics across the bloc’s key players.

Drivers of Economic Growth

The primary drivers of the Eurozone’s economic expansion were domestic in nature. Household spending rebounded strongly, indicating improved consumer confidence and purchasing power. Investment activity surged, with gross fixed capital formation jumping 2%, signaling businesses’ willingness to spend on long-term assets. Government spending provided additional support, helping stabilize growth amidst external pressures. However, the trade sector remained a weak link, with declining exports reflecting global economic uncertainties and rising imports signaling stronger domestic demand but weighing on net trade.

Best Annual Performance Since Early 2023

On an annual basis, the Eurozone GDP grew by 0.9% in Q3 2024, its best performance since Q1 2023. This improvement highlights a steady recovery for the region despite global challenges such as inflation and sluggish international trade. The robust domestic demand, coupled with strategic government policies, has helped the Eurozone regain its footing. However, with uneven growth across member states and external trade issues persisting, the bloc faces ongoing challenges in maintaining this momentum into the coming quarters.