The European Central Bank published Economic Bulletin analysis finding that cross-country dispersion in euro area real GDP growth has declined from the elevated levels seen during the pandemic and after Russia’s invasion of Ukraine to a relatively low level by historical standards. The study, based on euro area data excluding Ireland, also finds that recent differences in 2025 growth across countries are associated more with demographic and labour market developments than with productivity growth. The analysis shows that dispersion in real GDP per capita has generally been falling since 2015, consistent with renewed convergence after the pandemic interruption. Earlier spikes in growth dispersion were concentrated in specific sectors, notably manufacturing during the global financial crisis, consumer services during the pandemic, business services in 2022 and energy and manufacturing after the Ukraine shock. More recently, dispersion has become broader-based across manufacturing and services, although manufacturing still appears to matter more than its share of gross value added would suggest. In 2025, around 60% of euro area growth dispersion was explained by Germany and Spain. Germany’s weaker profile reflected slowing population growth, a falling working-age share and higher unemployment partly offset by higher labour force participation, while Spain’s stronger growth coincided with inward migration, a rising working-age population, higher participation and lower unemployment. In both countries, labour productivity contributed relatively little. Looking ahead, the ECB notes that the war in the Middle East could trigger a renewed rise in cross-country growth dispersion. Disruptions through the Strait of Hormuz and attacks on oil and gas infrastructure are pushing up energy prices and could widen differences across countries, particularly in manufacturing and other energy-intensive industries.
European Central Bank 2026-05-15
European Central Bank research finds euro area GDP growth dispersion has fallen to relatively low levels with 2025 gaps driven mainly by demographic and labour market trends
The European Central Bank published analysis showing that cross-country dispersion in euro area real GDP growth has fallen to relatively low levels, with recent differences driven mainly by demographic and labour market factors rather than productivity. Dispersion in real GDP per capita has generally declined since 2015, with recent growth differences largely explained by Germany’s weaker and Spain’s stronger performance, shaped by population dynamics, labour force participation and unemployment. The ECB warns that the war in the Middle East and related energy price pressures could again increase cross-country growth dispersion, especially in manufacturing and other energy‑intensive sectors.