Published by Global Banking & Finance Review®
Posted on January 9, 2026
3 min readLast updated: January 20, 2026
Add as preferred source on GoogleThe Euro zone economy ended 2025 strong with retail and industry growth, despite export challenges. Inflation remains stable, supporting economic resilience.
FRANKFURT, Jan 9 (Reuters) - Euro zone retail sales rose more than expected in November and German industry continued to expand, offering further evidence that the currency bloc ended a turbulent year with stable - if modest - growth, a string of data showed on Friday.
The euro zone economy grew quicker than most forecasts in 2025, indicating that firms and consumers are adjusting well to shocks such as the upending of global trade, but resilience is so far not turning into a boom and most expect only modest expansion this year.
"The main takeaway from the data released over the past few days is that the euro zone economy remains subdued, with inflation in a sweet spot at around 2%," Oxford Economics said in a note to clients.
This would satisfy the European Central Bank, which has supported the economy over the past two years with a steady stream of rate cuts, but is unlikely to do more.
GERMAN AUTO SECTOR SEES BOOST
Retail sales rose 0.2% on the month in November, just ahead of expectations for 0.1%, but growth of 2.3% compared to the previous year was well ahead of forecasts for 1.6%, due to a major upward revision of October figures.
Retail trade in Germany, the bloc's biggest economy which has skirted recession for three years now, grew slower than average but Spain continued to boom and France was also well above trend, data from Eurostat showed.
While the German economy remains broadly stagnant, industrial data offered a glimmer of hope on Friday.
Output grew 0.8% from the previous month, twice as fast as expected, and industrial orders climbed by 5.6% on the previous month, driven by large-scale orders.
The German industrial rebound should still prop up confidence which is already being supported by the government's plans to boost spending on defence and infrastructure.
"The stimulus is starting to work," Berenberg economist Holger Schmieding said. "More government spending will likely account directly for about 0.4 percentage points of (a GDP) rise."
"A rebound in residential construction due to low interest rates, faster approval procedures and a worsening shortage of housing will add to that," he added.
Indeed, economic growth is likely to start accelerating this year and end 2026 on a high note, helped by the fiscal splurge that should spill over into much of the euro area.
But exports, the engine of German growth over the past decades, continued to suffer in November, partly on a fall in sales to the U.S., separate data showed.
German exports fell by 2.5% in November from a month earlier and the trade surplus was down to 13.1 billion euros ($15.3 billion) from 17.2 billion euros a month earlier.
Compared with a year earlier, exports to the U.S. were down 22.9% after Washington imposed tariffs on most European goods.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
Retail trade refers to the sale of goods and services to consumers for personal use. It encompasses various businesses, including stores, online shops, and other sales channels.
Monetary policy is the process by which a central bank manages the money supply and interest rates to influence economic activity, aiming to achieve macroeconomic goals such as controlling inflation and fostering employment.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
Economic growth refers to the increase in the production of goods and services in an economy over time, often measured by the rise in GDP.
Explore more articles in the Finance category
