Eurozone Growth Expected to Remain Resilient Amid Energy Shock

ABN AMRO economists Bill Diviney and Jan-Paul van de Kerke are expecting Eurozone growth to remain resilient despite a renewed energy shock. They attribute this resilience to German fiscal spending and solid underlying activity, which they expect to continue supporting the region's economy.

The forecast for 2026 has been revised upwards from June's estimate, with a new projection of 0.8% growth. For 2027, the economists maintain their previous prediction of 1.2% growth.

However, they warn that higher and more persistent inflation raises risks of second-round effects and further European Central Bank (ECB) tightening. Headline inflation has already rebounded from its June trough of 2.8% to reach a three-year high of 3.3% in August, driven mainly by energy prices.

Inflation is now expected to peak above 3.5% over the coming months and average 3.0% in 2026 - 0.5pp higher than their June forecast. The rebound in inflation will sharpen the focus on second-round effects, particularly wage inflation.