Economists warned. Even though growth continues in Europe, there is a risk of stagflation

The European Union (EU) Statistical Office (Eurostat) has published the leading Gross Domestic Product (GDP) data of the Euro Zone for the third quarter of this year.

The data showed that the regional economy grew above market forecasts, despite the war in the Middle East and rising energy costs.

Accordingly, seasonally adjusted GDP in the 21-member Euro Zone, which uses the common currency euro, increased by 0.4 percent compared to the previous quarter in the July-September period.

This expansion rate in the region's economy, which grew by 0.6 percent in the second quarter, surpassed the median estimate of 0.2 percent of economists participating in the Bloomberg survey.

When the sub-items of the data were examined, it was noted that Ireland's strong performance played a decisive role in the increase in the headline growth rate.

The Irish economy's 5.5 percent growth in the third quarter changed the general picture.

Economists calculated that excluding Ireland, GDP growth across the Eurozone remained at 0.2 percent.

Speaking to the French AFP agency, ING Chief Economist Bert Colijn stated in his evaluation note on the subject that the regional economy seems to have eliminated the effects of the Middle East crisis.

Colijn stated that the economy maintained its resilience despite the deepening of the energy shock, and that the European industry directly benefited from the acceleration in technology and the increase in defense and infrastructure expenditures.

Even though economic growth exceeded expectations, experts remain cautious against the risk of stagflation, which is a combination of high inflation and stagnation.

As a result of the escalation of energy prices in the war waged by the USA and Israel against Iran, annual inflation in the Eurozone reached the peak of the last three years with 3.8 percent in September.

Oxford Economics Senior Economist Paolo Grignani stated that the published data presented a complex picture with stagflation trends.

Grignani pointed out that although GDP growth remained resilient, inflation figures announced at the national level surprised upwards, exceeding expectations.

Emphasizing that the regular increase in natural gas and energy costs as we enter the winter season will suppress growth, ING Chief Economist Colijn noted that Europe will face additional growth difficulties during the winter months.