Headline growth flatters: underneath, Europe and Mexico are growing steadily, not strongly

The headline beats

Spain's economy grew 0.6% in the third quarter of 2026 from the previous quarter, BBVA Research reports, in line with its forecast. Domestic demand sustained growth and the external sector contributed positively, with consumption and fixed investment meeting expectations and exports and construction surprising positively. Employment continued to grow and productivity improved, supporting BBVA Research's view that the data are consistent with growth of 2.6% for 2026 as a whole. m:…2765

Mexico's third quarter was stronger still on the headline number. GDP grew 0.9% from the previous quarter, BBVA Research reports, with signs of stronger momentum in industry and wholesale trade. Wholesale trade recorded double-digit annual growth since April, averaging 11.7% between April and August, and accounted for more than half of the annual growth of the monthly activity indicator in August. Gross fixed investment grew 1.7% cumulatively from a year earlier, driven by construction at 4.1%, and private consumption grew 2.1% cumulatively through July. m:…7798

At the global level, Citi Research projects growth of 2.7% for the current year, climbing to 2.8% for the following year, and describes the global economy as still powering ahead. But Citi also notes mounting uncertainties about the sustainability of the artificial intelligence boom, and the regional detail below shows why a single global or headline number can mislead: the composition of growth varies widely from country to country. m:…0167

Strip out Ireland and the eurozone slows

The eurozone grew 0.4% in the third quarter of 2026, ABN AMRO reports, well above its forecast of 0.1%. The surprise, however, is heavily skewed: Irish GDP jumped 5.5% in the quarter, after a 10% surge in the second quarter that ABN AMRO had expected to reverse. Excluding Ireland, eurozone growth was 0.2%, in line with ABN AMRO's expectation for solid underlying growth, and the bank says underlying growth has been stable at a pace of 0.2% to 0.3% and should broadly continue at that pace. m:…8229

The country detail confirms the steadier picture. The Netherlands grew 0.6% in the quarter and Germany grew 0.2%, above ABN AMRO's forecast of 0.1%, with German growth driven mainly by fiscal expansion. France, in contrast, contracted 0.1% after essentially zero growth in the first half of the year, and Italy's economy stagnated, with solid domestic demand offset by poor external demand and industrial weakness. ABN AMRO expects French growth to remain weak over coming quarters given fiscal tightening and political uncertainty, and no longer expects a meaningful pickup in underlying eurozone growth next year, citing high energy prices and rising interest rates. m:…8229

Spain fits the same pattern once the timing is examined. ABN AMRO notes that Spanish growth of 0.6% was probably helped by a rush to use remaining European recovery funds before their expiry as the facility wound down in August. That does not make the growth unreal, but it does mean the third-quarter figure should not be read as a new trend rate for Spain or for the eurozone. m:…8229

Mexico grows, but its balance sheet strains

Mexico's momentum has a demand story behind it that looks more durable than a one-off. BBVA Research expects momentum to continue, particularly in industry and wholesale trade, supported by growing demand for inputs across artificial intelligence value chains in the United States. The bank's forecasts of 1.4% growth for 2026 and 1.8% for 2027 carry upside risks on that view, and spending on imported goods grew 8.3% cumulatively through July, consistent with an industrial cycle tied to northern demand rather than a purely domestic rebound. m:…7798

The fiscal side tempers that story. Mexico's historical balance of public sector borrowing requirements stood at 52.6% of GDP in September 2026, BBVA Research reports. Total revenues fell 2.8% in real annual terms in January to September 2026, affected by a 21.5% contraction in oil revenues, while tax revenues grew only 0.7%. Total spending fell 0.4% in real annual terms, mainly because financial costs had a negative incidence of 0.5 percentage points on spending, and the primary balance of 3,866 million pesos came in 174,937 million pesos below the primary surplus target. m:…2330

BBVA Research concludes that a fiscal reform is considered necessary to increase tax revenue by at least two percentage points of GDP and improve the sustainability of public finances. Net domestic debt rose from 40.7% of GDP in December 2025 to 41.2% in September 2026, while external debt eased from 11.9% to 11.4% of GDP over the same period. For readers weighing Mexico's growth, the question is therefore not whether the third quarter was strong, but whether the public balance sheet can support the next phase of it. m:…2330