The Eurozone economy concluded 2025 on a surprisingly resilient note, buoyed by stronger-than-expected retail sales and a rebound in German industrial output. Despite ongoing global trade uncertainties and modest growth forecasts, recent economic data suggest the region is adjusting well to challenges, offering cautious optimism for 2026.

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Eurozone Retail Sales Exceed Expectations

Eurostat data revealed that retail sales across the Eurozone rose 0.2% in November 2025, slightly ahead of market forecasts of 0.1%. On an annual basis, retail trade expanded 2.3%, surpassing predictions of 1.6%. These figures were bolstered by an upward revision of October’s data, indicating a consistent recovery in consumer demand.

• Germany: Retail growth remained slower than the Eurozone average, reflecting a cautiously spending public in the bloc’s largest economy.
• Spain and France: Both countries recorded above-trend retail growth, with Spain continuing a strong expansion and France performing better than expected.

The data suggest that European consumers are increasingly adapting to economic shocks, including fluctuating energy prices and global trade disruptions.

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German Industrial Sector Rebounds Strongly

Germany’s industrial sector, long a pillar of European growth, showed a robust rebound in November:

• Industrial output increased by 0.8% month-on-month, double analysts’ expectations.
• Industrial orders surged 5.6%, fueled by large-scale contracts and investment projects.

Economists view this recovery as a critical driver of confidence in the German economy, with support from ongoing government stimulus plans for infrastructure and defense spending.

Holger Schmieding of Berenberg Bank noted, “The stimulus is starting to work. More government spending will likely contribute around 0.4 percentage points to GDP growth.”

In addition, a rebound in residential construction, spurred by low interest rates, streamlined approval processes, and acute housing shortages, is expected to further boost economic activity.

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Exports Remain a Weak Link

Despite these positive developments, German exports—a key engine of the country’s post-war growth—remained subdued in November:

• Exports fell 2.5% month-on-month, reducing the trade surplus to €13.1 billion, down from €17.2 billion in October.
• Exports to the United States dropped 22.9% year-on-year, largely due to U.S. tariffs on European goods.

The decline highlights that while domestic consumption and industrial activity are resilient, external demand remains volatile, especially from major trading partners like the U.S.

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Eurozone Growth Outlook

Overall, the Eurozone economy demonstrated modest yet stable growth in 2025. Oxford Economics highlighted that inflation remains near 2%, within the European Central Bank’s target range. This suggests monetary policy will remain supportive but not expansionary.

Looking ahead, economists expect:

• Gradual acceleration in GDP growth across the Eurozone.
• Spillover effects from German fiscal stimulus into neighboring economies.
• Continued strength in retail and construction sectors, partially offsetting weaker export performance.

Analysts generally forecast modest growth for 2026, emphasizing resilience rather than a boom. Nevertheless, the combination of stable inflation, robust domestic demand, and targeted government spending positions the Eurozone for a solid start to the year.

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Key Takeaways

• Eurozone retail sales exceeded expectations, with annual growth of 2.3%.
• Germany’s industrial output and orders rebounded strongly in November 2025.
• German exports weakened, particularly to the U.S., highlighting external vulnerabilities.
• Government stimulus and construction recovery are expected to support economic growth in 2026.