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Euro Area Economic Forecast

Euro Area Economic Outlook

Economic growth is forecast to rise next year compared to 2024’s expected rate. Private consumption will accelerate as inflation cools. Moreover, fixed investment is seen rebounding on the back of looser financing conditions. Sustained weakness in Germany’s industrial sector and U.S. tariffs in the event of a Trump presidency are downside risks.

Euro Area Inflation

In September, harmonized inflation fell to 1.7% from August’s 2.2%—falling below the ECB’s 2.0% target—driven by a faster decline in energy prices and slower services price growth. In 2025, inflation is expected to average around the ECB’s 2.0% target. Premature monetary policy easing and faster-than-expected wage growth are upside risks.

This chart displays Economic Growth (Real GDP, ann. var. %) for Euro Area from 2010 to 2021.

2019 2020 2021 2022 2023
GDP per Capita (USD) 40,315 39,213 44,151 42,586 46,348
Economic Growth (Real GDP, ann. var. %) 1.6 -6.2 6.3 3.6 0.5
1.4 -7.9 4.7 4.9 0.7
7.1 -6.0 3.6 2.2 1.8
Industrial Production (ann. var. %) -0.9 -7.8 8.8 2.3 -2.2
Unemployment (% of active population, aop) 7.6 8.0 7.8 6.8 6.6
Fiscal Balance (% of GDP) -0.5 -7.0 -5.1 -3.5 -3.6
Public Debt (% of GDP) 83.6 96.5 93.8 89.5 87.4
Policy Interest Rate (%, eop) 0.00 0.00 0.00 2.50 4.50
Current Account Balance (% of GDP) 2.5 1.8 2.5 -0.1 1.7
Merchandise Trade Balance (USD bn) 352 390 344 -48 277
Merchandise Exports (USD bn) 2,571 2,397 2,873 3,020 3,045
Merchandise Imports (USD bn) 2,219 2,007 2,529 3,067 2,767
International Reserves (USD bn) 914 1,079 1,197 1,187 1,267
Money (ann. var. of M2 %) 5.7 11.0 7.0 3.6 -0.7

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