Eurozone Growth Resilient Despite Renewed Energy Shock

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

The economists expect the region's growth rate to be 0.8% in 2026, up from their previous forecast, while keeping their 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.

The recent energy shock has led to a significant increase in headline inflation, which has rebounded from its June trough of 2.8% to reach a three-year high of 3.3% in August. The economists predict that inflation will peak above 3.5% over the coming months and average 3.0% in 2026, 0.5 percentage points higher than their previous forecast.