Euro Area Economic Outlook
Economic growth should accelerate in 2027, after hitting a three-year low in 2026. Stronger growth in fixed investment, driven by German fiscal stimulus, will be the main driver. That said, the bloc’s economy will still trail the major economies’ average in 2027 due to comparatively softer consumption growth.
Euro Area Inflation
Harmonized inflation rose to 4.0% in October from 3.8% in September, its highest reading since September 2023 and further above the ECB’s 2.0% target. Average inflation should retreat in 2027 from 2026’s three-year high as energy prices gradually fall, but should stay above the target until 2028. A drawn-out U.S.-Iran conflict is an upside risk.
This chart displays Economic Growth (Real GDP, ann. var. %) for Euro Area from 2010 to 2025.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| GDP per Capita (USD) | 42,670 | 41,230 | 44,958 | 46,695 | 50,359 |
| Industrial Production (ann. var. %) | 9.0 | 1.9 | -1.7 | -3.0 | 1.7 |
| Public Debt (% of GDP) | 93.6 | 89.2 | 86.7 | 86.6 | 87.7 |
| Current Account Balance (% of GDP) | 2.7 | -0.2 | 1.7 | 2.5 | 1.7 |
| Merchandise Trade Balance (USD bn) | 335 | -62 | 271 | 354 | 371 |
| Merchandise Exports (USD bn) | 2,872 | 3,025 | 3,058 | 3,050 | 3,244 |
| Merchandise Imports (USD bn) | 2,537 | 3,087 | 2,788 | 2,696 | 2,873 |
| Economic Growth (Real GDP, ann. var. %) | 6.4 | 3.7 | 0.6 | 1.2 | 1.3 |
| Fixed Investment (ann. var. %) | 3.6 | 2.6 | 2.8 | -1.8 | 3.0 |
| Fiscal Balance (% of GDP) | -5.1 | -3.4 | -3.4 | -3.0 | -3.0 |
| Private Consumption (ann. var. %) | 4.6 | 5.3 | 0.6 | 1.6 | 1.4 |
| Unemployment (% of active population, aop) | 7.7 | 6.7 | 6.6 | 6.4 | 6.3 |
| Policy Interest Rate (%, eop) | 0.00 | 2.50 | 4.50 | 3.15 | 2.15 |
| Money (ann. var. of M2 %) | 7.0 | 3.6 | -0.8 | 3.2 | 3.1 |
| International Reserves (USD bn) | 1,197 | 1,188 | 1,268 | 1,449 | 2,087 |