Eurozone Economy Expands 0.2% as Spain Drives Growth

Eurozone economy grows 0.2% in Q3 2025 as Spain and France drive expansion, while Germany and Italy stagnate. Trade surplus surges on US exports, but labor market remains flat amid rising bankruptcies.

The Eurozone economy grew by 0.2% in the third quarter of 2025, according to official data from Eurostat, as strong performances in Spain and France offset prolonged stagnation in Germany and Italy. The bloc’s annual growth rate reached 1.4%, slightly above initial estimates, highlighting resilience despite ongoing challenges in key member states.

Spain Leads Eurozone Growth

Spain remained the standout performer, with quarterly growth of 0.6%, driven by robust household spending and investment. France also posted solid gains, expanding 0.5% thanks to a rebound in exports. The Netherlands contributed with a 0.4% increase, further supporting the bloc’s overall expansion.

Germany and Italy Stagnate

Germany’s economy showed no growth for the third consecutive quarter, weighed down by weak external demand and declining exports, especially in the automotive sector. Italy’s industrial output contracted, and the services sector remained flat, resulting in no growth for the period.

Trade Surplus Boosted by US Exports

The Eurozone’s trade surplus surged to €19.4 billion in September, up from €1.9 billion in August, as exports to the United States grew 15.4% year-over-year. The bloc recorded a €22.2 billion surplus with the US, the highest in recent months, driven by strong sales of chemicals and machinery.

Labour Market Flat Amid Rising Bankruptcies

Employment in the Eurozone rose just 0.1% in the third quarter, the slowest pace since the post-Covid recovery began. Spain led with 0.7% job growth, while Germany saw a 0.1% contraction. Unemployment remained steady at 6.3%. Business bankruptcies increased 4.4%, with the sharpest rises in accommodation, food services, and transport sectors.

Outlook and Implications

Despite Germany’s stagnation and rising bankruptcies, the Eurozone’s resilience is evident in the continued expansion of Spain and France. The trade surplus and steady employment figures suggest underlying strength, though challenges remain for industrial sectors and consumer-facing businesses.