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(Bloomberg) — Economic growth in the euro zone is set to quicken after showing surprising resilience to the Iran war, according to a Bloomberg survey of analysts.
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The 21-nation bloc is forecast to expand 0.8% in 2026, up from a 0.5% estimate in July. That revision almost exclusively reflects a stronger performance between April and June, when gross domestic product increased 0.4%, twice as much as projected.
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Survey respondents kept their growth profile for the coming quarters unchanged, anticipating a reading of 0.2% in the third and a gradual pickup in momentum from there.
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The region has shaken off an array of challenges in recent months, including higher energy prices, cost and job cuts at European carmakers, wildfires and historically low levels in key waterways.
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Sentiment has improved of late amid renewed attempts to end the conflict in the Middle East and reopen the Strait of Hormuz. Optimism is also fed by German efforts to revive growth.
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Europe’s largest economy is seeing a spending boom in its defense sector that’ll help boost the overall rate of expansion to 1.2% in 2028 from 0.8% this year, according to a separate Bloomberg survey. The latter marks an upward revision from the 0.6% predicted by analysts last month, also due to unexpected second-quarter strength.
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A comprehensive reform package agreed by Chancellor Friedrich Merz’s government is set to raise potential in the medium to longer term. At the same time, firms across the continent are wary of the risks. Some are already warning of “double-digit million” hits to earnings as low water levels in the Rhine and Danube rivers hamper transport.
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