Euro Area Economic Outlook
GDP growth is projected to accelerate in 2025 from 2024. Private spending and fixed investment will benefit from interest rate cuts and lower inflation. However, our panelists recently downgraded their forecasts for exports in light of rising trade frictions with the U.S. The health of Germany’s industry plus the timing and size of U.S. tariff hikes are key to track.
Euro Area Inflation
In January, harmonized inflation rose to 2.5% from December’s 2.4%, driven by a sharper increase in energy prices. Inflation is seen declining in the coming months and stabilizing near the ECB’s 2.0% target from Q2 onwards, tamed by softening oil prices. Geopolitical conflict stoking commodity prices, faster wage growth and greater U.S. protectionism are upside risks.
This chart displays Economic Growth (Real GDP, ann. var. %) for Euro Area from 2010 to 2024.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| GDP per Capita (USD) | 39,214 | 44,151 | 42,589 | 46,359 | 47,955 |
| Economic Growth (Real GDP, ann. var. %) | -6.2 | 6.3 | 3.6 | 0.5 | 0.8 |
| Private Consumption (annual variation in %) | -7.9 | 4.7 | 5.0 | 0.6 | 1.0 |
| Investment (annual variation in %) | -6.0 | 3.7 | 2.1 | 2.0 | -2.0 |
| Industrial Production (ann. var. %) | -7.8 | 9.0 | 1.7 | -1.7 | -2.9 |
| Unemployment (% of active population, aop) | 8.0 | 7.8 | 6.7 | 6.6 | 6.4 |
| Fiscal Balance (% of GDP) | -7.0 | -5.1 | -3.5 | -3.6 | - |
| Public Debt (% of GDP) | 96.5 | 93.8 | 89.5 | 87.4 | - |
| Policy Interest Rate (%, eop) | 0.00 | 0.00 | 2.50 | 4.50 | 3.15 |
| Current Account Balance (% of GDP) | 1.8 | 2.5 | -0.1 | 1.6 | 2.8 |
| Merchandise Trade Balance (USD bn) | 390 | 344 | -48 | 276 | 423 |
| Merchandise Exports (USD bn) | 2,397 | 2,873 | 3,020 | 3,041 | 3,087 |
| Merchandise Imports (USD bn) | 2,007 | 2,529 | 3,068 | 2,765 | 2,664 |
| International Reserves (USD bn) | 1,079 | 1,197 | 1,187 | 1,267 | 1,448 |
| Money (ann. var. of M2 %) | 11.0 | 7.0 | 3.5 | -0.8 | 3.1 |