Slight upside GDP surprise masks future disruption risks

Eurozone GDP growth outperformed expectations in Q3, showing greater resilience to the US trade war and geopolitical tensions than previously anticipated. We believe the negative impact of tariffs and geopolitical tensions has not yet fully materialised, which is why we expect slightly weaker GDP growth in Q4 compared to Q3. Our forecast sees average growth at 1.3% in 2025, boosted by frontloading earlier this year, and 0.9% in 2026, weighed down by a weaker end to 2025. Downside risks to the economic outlook stem from both domestic and international political developments. The EU remains vulnerable to export and supply chain disruptions caused by US tariffs and Chinese controls on rare earth exports.