Eurozone Growth Resilient Despite Energy Shock, Inflation Woes

ABN AMRO economists Bill Diviney and Jan-Paul van de Kerke expect Eurozone growth to remain resilient despite a renewed energy shock. They attribute this resilience to German fiscal spending and solid underlying activity.

The economists have revised their growth forecast for 2026 to 0.8%, while keeping the projection for 2027 at 1.2%. However, they warn that higher and more persistent inflation raises risks of second-round effects and further European Central Bank (ECB) tightening.

Headline inflation in the Eurozone has rebounded from its June trough of 2.8% to reach a three-year high of 3.3% in August, driven almost entirely by energy prices.

The economists expect inflation to peak above 3.5% over the coming months and average 3.0% in 2026, which is 0.5 percentage points higher than their June forecast.