Euro Area Economic Outlook
After months of downgrades due to the Iran war, our Consensus for 2026 GDP growth has stabilized. Economic growth is now seen at a three-year low this year on the back of higher energy costs weighing on household real incomes and, in turn, private consumption growth. The resumption of the U.S.-Iran war is a downside risk.
Euro Area Inflation
In June, harmonized inflation in the euro area fell 2.8% from May’s 3.2%, but remained north of the ECB’s 2.0% target for a fourth straight month. Average inflation is forecast to hit a three-year high in 2026 and remain above target until 2029 amid higher energy prices, which will feed into food, goods and services inflation.
This chart displays Economic Growth (Real GDP, ann. var. %) for Euro Area from 2010 to 2025.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Money (ann. var. of M2 %) | 7.0 | 3.6 | -0.8 | 3.2 | 3.1 |
| GDP per Capita (USD) | 42,563 | 41,169 | 44,835 | 46,444 | 50,078 |
| Fixed Investment (ann. var. %) | 3.6 | 2.3 | 2.8 | -2.3 | 3.1 |
| Economic Growth (Real GDP, ann. var. %) | 6.4 | 3.7 | 0.6 | 1.0 | 1.3 |
| Unemployment (% of active population, aop) | 7.7 | 6.7 | 6.5 | 6.4 | 6.3 |
| Industrial Production (ann. var. %) | 9.0 | 1.9 | -1.7 | -3.0 | 1.6 |
| Private Consumption (ann. var. %) | 4.6 | 5.3 | 0.6 | 1.3 | 1.5 |
| Public Debt (% of GDP) | 93.8 | 89.3 | 86.9 | 87.0 | 87.8 |
| Fiscal Balance (% of GDP) | -5.1 | -3.4 | -3.5 | -3.0 | -2.9 |
| Merchandise Exports (USD bn) | 2,876 | 3,025 | 3,051 | 3,044 | 3,263 |
| Merchandise Imports (USD bn) | 2,531 | 3,077 | 2,769 | 2,653 | 2,847 |
| Current Account Balance (% of GDP) | 2.7 | -0.3 | 1.6 | 2.7 | 1.6 |
| International Reserves (USD bn) | 1,197 | 1,188 | 1,268 | 1,449 | 2,087 |
| Merchandise Trade Balance (USD bn) | 345 | -52 | 282 | 391 | 415 |
| Policy Interest Rate (%, eop) | 0.00 | 2.50 | 4.50 | 3.15 | 2.15 |