The euro zone recorded an unexpected contraction in the first three months of 2026 due to a steep slump in Ireland’s economic figures, according to revised data issued today.
The economy 21-country euro zone shrank 0.2% compared to the previous three-month period, according to the EU’s statistics agency, which had earlier estimated first quarter growth to be near-flat at 0.1%.
The unusually steep downward revision was due to a sharper-than-estimated contraction in Ireland – where economic activity fell 12.1% compared to an initial forecast of 2%.
The Central Statistices Office said yesterday that the exceptional revision was due to the incorporation of data related to multinational companies, which carry significant weight in the Irish economy.
France’s performance was also revised down at the end of May, with GDP falling by 0.1% in the euro zone’s second-largest economy instead of the flat reading previously reported by statistics agency Insee.
“Excluding the effect of Irish GDP, euro zone growth remains remarkably steady at around 0.2% per quarter,” noted Rory Fennessy of Oxford Economics.
That said, the outlook for the euro zone remained lacklustre as the Middle East war and subsequent energy shock take their toll on the region’s economy, with no end in sight.
All indications are “that the worst of the impact on growth from the current supply and inflation shock is yet to come,” Fennessy wrote.
The analyst noted that first quarter growth was likely boosted by companies “frontloading” purchases to try to get ahead of supply disruptions due to the conflict, as well as by defence spending.
He predicted that effect to dissipate in the second quarter, leading euro zone GDP – excluding Ireland – to stagnate in the spring.
