Euro area: GDP growth came higher than expected in Q3, raising the bar for a 50 bps ECB rate cut in December

Euro Area GDP increased by +0.4% Q/Q in Q3 after +0.2% in Q2 according to Eurostat preliminary figures , higher than consensus and our expectations of +0.2%. Heterogeneity persists between countries: Spa nish GDP growth continues to outperform its peers with +0.8% Q/Q, while French GDP accelerated to +0.4% Q/Q, boosted by an “Olympic” effect. German GDP growth surprised to the upside to +0.2% Q/Q (vs. -0.1% expected) while Italian GDP disappointed (0.0% Q/Q vs. +0.2% expected). Our Euro area GDP growth forecast for Q4 remains unchanged at +0.3% Q/Q, with 2024 annual growth expected at +0.8%. The robust Q3 GDP growth reduces the likelihood of a 50 bp rate cut by the ECB in December , suggest ing that business survey s are potentially a bit too pessimistic on the current state of the euro area economies . We continue to forecast a 25bp cut at the December meeting.