Throughout the European Union’s main economies, the final quarter was not a reasonably one. It’s seemingly that Germany formally entered a recession, Italy continued to wrestle to keep away from a recession, and the U.Ok.—nonetheless a part of the EU, although exhausted by preparations for Brexit—may solely be relieved that the third quarter was not fairly as dismal because the second.
The one exception—it appears—was France, the one “brilliant spot” among the many EU’s economies, based on a report from the Economist‘s Intelligence Unit, which on Wednesday painted an underwhelming image of Europe’s financial state.
“Issues have actually slowed down this yr, and to be sincere, it is a slowdown that began on the finish of final yr,” when commerce worries started to develop, mentioned Emily Mansfield, principal economist for Europe on the EIU. That’s attributable to a “entire vary of largely exterior elements.”
The U.S.-China commerce struggle, slowing progress in China, and ongoing uncertainty over the EU’s commerce relationship with the U.S. have proved to be highly effective headwinds for nations which have comparatively robust home economies. These forces have hit export-driven economies—significantly Germany, which depends closely on sending items to China and the U.S.—the toughest, Mansfield mentioned. (The U.Ok. doesn’t match completely into this development because it has inside issues too; three years of Brexit uncertainty have produced a novel mix of financial malaise: it’s anticipated to put up a 0.10% acquire in Q3, the EIU mentioned, up from a drop of 0.22% in Q2.)
In the meantime, in France, “issues are literally wanting fairly good,” mentioned Mansfield.
France grew by 0.3% within the third quarter year-over-year, the nation’s official statistics workplace mentioned Wednesday, making it seemingly the fastest-growing main financial system within the bloc, based on EIU estimates. Official figures from a number of main nations, together with Germany, are nonetheless forthcoming.
The French financial system has benefitted from relying closely on the service business, Mansfield mentioned, which has insulated it considerably from international commerce jitters. Financial reform insurance policies by President Emmanuel Macron—whereas controversial inside France—have additionally elevated hiring, she mentioned.
And whereas France’s progress seems to be significantly robust in comparison with the grim temper over the border in Germany, Mansfield famous that for an financial system of its dimension, its tempo of progress is first rate even other than its friends.
“It does look good within the present context,” she mentioned. However, “realistically, it’s a highly-advanced financial system, and it’s onerous for economies which can be that wealthy within the first place to develop.”
In the meantime, whereas the U.S. is forecast to develop by 0.4% within the third quarter, the EIU famous that the American financial system is “displaying indicators of pressure,” with client sentiment undercut by the commerce tariffs and the manufacturing sector feeling the stress of rising import costs and weakening demand in markets like China and the EU.
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