The GPM Global Forecast is a bi-weekly, members-only article series for 2017. It provides analysis and short-term forecasting on key military, political, and economic events around the globe.

Q3 Was a Good Quarter for the Euro Zone Economies

A flurry of positive euro zone data was released on Tuesday. For the most part the numbers were better than many economists had predicted. Here are some of the highlights:

• Euro zone GDP grew 0.6% quarter-on-quarter and 2.5% year-on-year in Q3. The expansion was the bloc’s largest since Q1 2011.
• France data was a mixed bag. The country posted respectable 0.5% GDP growth quarter-on-quarter in Q3. It saw net exports drop slightly over Q3, but also reported increases in domestic spending and investment.
• The UK reported quarter-on-quarter growth of just 0.4% in Q3, up from 0.3% in Q2. Earlier this month the UK’s CPI climbed to 3%, its highest level since April 2012. This uptick in inflation has some worried that the Bank of England will be forced to hike interest rates next month, a move that would further dampen economic growth.
• Euro zone employment numbers also came in on the positive end. The euro zone unemployment rate dropped to 8.9% in September, the lowest it has been since the Great Recession took hold around the beginning of 2009. Among euro zone countries, Greece, Spain, Italy, and Croatia are posting the highest unemployment numbers last month.
• News was less positive on the inflation front. Official results showed that consumer prices rose 1.4% across the euro zone, coming in below the consensus prediction of 1.5%. Looking ahead, ECB economists will be watching inflation closely as the ECB cuts its monthly bond purchases and continues to wind down QE.
• Elsewhere, the euro zone’s 0.6% Q2 growth result has recently been revised upward to 0.7%.