Euro Area Economic Outlook
GDP growth should accelerate in 2025 from 2024. Private spending will gain traction on lower inflation, and fixed investment is set to rebound due to looser financing conditions. Higher U.S. tariffs pose a downside risk, though our panelists still see exports growth strengthening. Sustained weakness in Germany’s industrial sector is an additional downside risk.
Euro Area Inflation
In November, harmonized inflation rose to 2.3% from October’s 2.0%, though the increase largely reflected a weaker drop in energy prices due to a base effect. In 2025, inflation is forecast to average around the ECB’s 2.0% target, curbed by easing commodity prices and past interest rate hikes. Faster wage growth poses an upside risk.
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 | 39,214 | 44,151 | 42,586 | 46,347 |
| 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 | 3.7 | 2.2 | 1.8 | |
| Industrial Production (ann. var. %) | -1.0 | -7.8 | 9.0 | 1.7 | -1.7 |
| 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 | 3.5 | -0.9 |