Euro Area Economic Outlook
Our panelists upgraded their 2025 GDP growth projections over the past month as Q2’s GDP print exceeded expectations. The economy should grow at a faster pace than in 2024, thanks to lower inflation and interest rates boosting private spending and fixed investment. However, public spending growth should ease, and U.S. tariffs will drag on exports in H2.
Euro Area Inflation
In July, harmonized inflation remained at June’s 2.0%, in line with the ECB target. Inflation is forecast to remain near target in the coming quarters, kept in check by low oil prices and soft economic activity. A fragmentation of global supply chains pushing up import prices is an upside risk. The value of the euro, which influences import costs, is key to watch.
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) | 38,950 | 43,852 | 42,319 | 46,025 | 47,637 |
| Economic Growth (Real GDP, ann. var. %) | -6.2 | 6.3 | 3.7 | 0.5 | 0.8 |
| Private Consumption (annual variation in %) | -7.9 | 4.6 | 5.3 | 0.5 | 1.2 |
| Investment (annual variation in %) | -6.0 | 3.7 | 2.1 | 2.0 | -2.1 |
| Money (ann. var. of M2 %) | 11.0 | 7.0 | 3.5 | -0.8 | 3.2 |
| Industrial Production (ann. var. %) | -7.8 | 9.0 | 1.8 | -1.7 | -3.0 |
| Unemployment (% of active population, aop) | 8.0 | 7.8 | 6.8 | 6.6 | 6.4 |
| Fiscal Balance (% of GDP) | -7.0 | -5.1 | -3.5 | -3.5 | -3.1 |
| Public Debt (% of GDP) | 96.5 | 93.9 | 89.5 | 87.3 | 87.4 |
| Policy Interest Rate (%, eop) | 0.00 | 0.00 | 2.50 | 4.50 | 3.15 |
| Current Account Balance (% of GDP) | 1.8 | 2.7 | -0.2 | 1.6 | 2.6 |
| Merchandise Trade Balance (USD bn) | 390 | 345 | -48 | 272 | 393 |
| Merchandise Exports (USD bn) | 2,397 | 2,876 | 3,022 | 3,043 | 3,050 |
| Merchandise Imports (USD bn) | 2,007 | 2,530 | 3,070 | 2,772 | 2,656 |
| International Reserves (USD bn) | 1,079 | 1,197 | 1,187 | 1,267 | 1,448 |