The Eurozone economy increased faster than anticipated during the previous quarter because consumption and investments got going in high gear, compensating for the low exports and the unprecedented uncertainty that arises due to the U.S. trade policy, according to the Eurostat information on Friday.

These statistics are indicators of the impressive strength of the 350-million people bloc that had been forecasted to fall into a trade war with the U.S., a wave of export cutthroat rivalry with China and a military conflict with its eastern frontiers.

However, the euro zone achieved decent– albeit not spectacular growth every quarter last year, even as industry and exports, the two former drivers of growth, find it hard to find their footing.

SPAIN CONTINUES TO BE A GROWTH DRIVER

The economy of the bloc improved by 0.3 per cent in the quarter (exceeding the expectations of 0.2 per cent in a poll carried out by Reuters) and 1.3 per cent in comparison to the previous year, which was compared to the expectations of economists who assumed a rate of 1.2 per cent.

Spain has been the engine of growth, with its growth increasing faster than expected at 0.8%, yet Germany, the biggest economy in the euro zone, has also appeared to grow out of the dismal years of struggling to increase by 0.3, which was more than what economists predicted; it would increase by 0.2.

“The fourth quarter performance (in the case of Germany) is, admittedly, modest, but it is the best quarterly performance over the past three years,” according to economist Carsten Brzeski of ING. “Increasing new orders and decreasing inventories are a good sign that there will be at least a soft turnaround in the industry.”

Italy also outperformed the expectations with 0.3 per cent growth, as France, which has been crippled by political unrest, grew as expected by 0.2 per cent.

Ireland, though, caused a statistical drag to the bloc because its huge multinational industry, which had been based there due to taxation reasons, shrank radically. This is rather a statistical effect, though, and does not reflect real contraction in the economy.

2026 OFF TO A GOOD START

Other characters already indicate that the bloc was in a reasonably good position to begin 2026.

One of the major sentiments reading out on Thursday had a surprising surge, led by France and Germany, and diverse, broad-based gains in all major sectors.

Meanwhile, industry is also beginning to stabilise, households have finally begun to lower their already high savings rate, unemployment is at record lows, and inflation is moderately maintained at the 2 per cent target of the European Central Bank.

The forecasts are also enhanced by the fact that Germany is experiencing a spending spurt on infrastructure and defence spending, which might not pick up and may take time to pick up, but will have a noticeable effect on growth in the second quarter.

This will bring three years of stagnation of Germans to an end and probably pull up the rest of Europe since its industry depends on a large base of suppliers scattered throughout the bloc.

Nevertheless, exports may not improve in full any time soon, but with U.S tariffs that have been getting tougher, stiff competition posed by China, which has been on the rise and the fall of the dollar in the last year, there may be a long-term change in the pattern of trade.

This leaves the domestic economy with the task of seeking alternative sources of growth. However, according to the economists, consumption holds a lot of reserves, even like the intra-EU trade, and that is why the future remains rather optimistic.

In fact, it is projected that growth will continue over the years at around 1.2 per cent to 1.5 per cent or the potential of the bloc.

This renders the ECB very comfortable since inflation is within the target, interest rates are maintained at a neutral level, and growth is within the potential, which some policymakers refer to as the nirvana of central banking.

This is the reason why investors will not observe the interest rate varying throughout the year unless it is a fresh shock that will disturb the view.