Euro Area Economic Outlook
GDP should rise timidly this year. A resilient labor market, stronger external demand, the disbursement of EU Next Generation funds and softer inflation will support activity, but the lagged effects of past interest rate hikes and ailing industrial production will run counter to growth. Potential financial turbulence, coupled with high public debt loads, poses a risk.
Euro Area Inflation
Harmonized inflation fell to 2.8% in January (December: 2.9%), on softer increases in prices for food, alcohol and tobacco, and non-energy industrial goods. Inflation will abate sustainably this year from 2023’s average owing to the lagged effects of previous monetary tightening and a high base effect. Wage-price spirals and commodity price spikes are upside risks.
2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|
Fiscal Balance (% of GDP) | -0.6 | -7.1 | -5.2 | -3.6 | - |
Public Debt (% of GDP) | 84.1 | 97.2 | 94.7 | 90.9 | - |
CBI Policy Rate (%, eop) | 0.00 | 0.00 | 0.00 | 2.50 | 4.50 |
Exchange Rate (LBP per USD, eop) | 1.12 | 1.22 | 1.14 | 1.07 | 1.10 |
Current Account Balance (% of GDP) | 2.5 | 1.7 | 2.8 | -0.6 | 1.8 |
Merchandise Trade Balance (USD bn) | 334 | 379 | 328 | -83 | 296 |
Merchandise Exports (USD bn) | 2,667 | 2,481 | 2,958 | 3,107 | 3,144 |
Merchandise Imports (USD bn) | 2,333 | 2,102 | 2,630 | 3,190 | 2,848 |
International Reserves (USD bn) | 914 | 1,079 | 1,197 | 1,187 | 1,267 |
Money (ann. var. of M2 %) | 5.7 | 11.0 | 7.1 | 3.6 | -0.7 |
GDP per capita (USD) | 40,006 | 38,890 | 43,679 | 41,929 | 45,800 |
Economic Growth (GDP, ann. var. %) | 1.6 | -6.2 | 5.9 | 3.5 | 0.5 |
Private Consumption (ann. var. %) | 1.4 | -7.8 | 4.4 | 4.2 | 0.6 |
Fixed Investment (ann. var. %) | 6.5 | -6.2 | 3.7 | 2.6 | 1.4 |
Industrial Production (ann. var. %) | -0.7 | -7.7 | 8.9 | 2.3 | -2.4 |
Unemployment (% of active population, aop) | 7.6 | 8.0 | 7.7 | 6.7 | 6.5 |