Eurozone Growth Holds Despite Higher Energy Costs

Growth across the 21 countries using the euro reached 0.4% from the previous quarter in July through September, above analysts’ 0.2% forecast. Compared with a year earlier, the economy expanded 1.3%. Excluding Ireland, quarterly growth was 0.2%. Ireland’s 5.5% increase lifted the overall figure; its results can fluctuate because multinational companies’ global operations affect the country’s economic data.

Economists said households and businesses had not significantly cut spending amid the conflict. But higher oil costs are beginning to affect prices and wages in other sectors, raising concern that inflation could become more persistent.

Inflation stood at 3.8%, above the European Central Bank’s 2% target. The ECB kept interest rates unchanged on October 29, but could increase them at its December meeting to bring inflation down. Higher rates would raise borrowing costs while growth remains modest and uneven.

Germany’s economy grew 0.2%, despite energy costs and low river levels disrupting commerce. France contracted 0.1% as political deadlock over its large budget deficit weighed on business confidence. Spain, the Netherlands and Estonia each recorded growth of 0.6%.