Euro Area

Euro Area Economy

Euro Area economic overview

Global powerhouse:

The euro area, comprising 20 member states of the European Union that have adopted the euro as their common currency, boasts a significant economic presence, with a GDP of USD 16 trillion and a population of over 340 million. It ranks as the third-largest economy globally after those of China and the U.S. The euro area economy is characterized by its strong industrial base, diverse services sector, and significant trade linkages within the region and beyond. Further members could join the euro area in the coming years.

Muted recent economic performance:

The euro area economy has experienced moderate GDP growth since the global financial crisis of 2008, weighed on by unfavorable demographics, rigid labor markets, constrained public spending, and the impact of the debt crisis on investor confidence. Moreover, the lack of dynamic, high-tech companies present in the U.S. and parts of Asia has also likely played a role in subduing the Euro area's relative economic performance. The euro area has a stronger presence in old-economy industries such as banking, combustion-engine vehicles, machinery, aerospace and pharmaceuticals.

Fiscal expansion:

Since the Covid-19 pandemic, the euro area has adopted a more supportive fiscal stance: the bloc's rules on debt and deficits were suspended, and a EUR 800 billion NextGenerationEU recovery fund was agreed to finance projects—particularly those related to the green transition—across the EU. This Fund should continue to provide an important boost to economic activity in the euro area, particularly in southern and eastern Europe.

Strategic change of direction:

The pandemic, rising tensions with China and the outbreak of war between Russia and Ukraine have led to a greater focus on ensuring self-reliance within the euro area and broader EU, particularly regarding energy supply and critical manufactured goods. This focus is likely to continue in the coming years, though the slowness of the EU's institutions and diverging views among member states will limit the pace of transition.

Challenges:

The euro area faces multiple challenges, including an aging population, extremely high public debt levels in many members' economies, a lack of presence in emerging industries that will power the future of the world economy, and political tensions among members.

The euro area's economic outlook:

A strong institutional framework, a skilled workforce, and a commitment to economic integration are all factors that will work in the Euro area economy's favor in the coming years, though GDP growth will likely lag well behind that seen in the U.S.

The Euro Area's economy in numbers:

Nominal GDP of USD 14,182 billion in 2022.

GDP per capita of USD 41,883 compared to the global average of USD 10,589.

Average real GDP growth of 1.2% over the last decade.

Share of the region's population
Share of the region's GDP

GDP by economic sector
GDP by type of expenditure

Economic growth:

The economy recorded average annual growth of 1.2% in the decade to 2022. To read more about GDP growth in the Euro Area, go to our dedicated page.

Fiscal policy:

Euro Area's fiscal deficit averaged 2.8% of GDP in the decade to 2022. Find out more on our dedicated page.

Unemployment:

The unemployment rate averaged 9.4% in the decade to 2022. For more information on Euro Area's unemployment click here.

Inflation:

Inflation averaged 1.9% in the decade to 2022. Go to our Euro Area inflation page for extra insight.

Monetary Policy:

The Euro Area monetary policy rate ended 2022 at 2.50%, up from 0.75% a decade earlier. See our Euro Area monetary policy page for additional details.

Exchange Rate:

From end-2012 to end-2022 the euro weakened by 18.2% vs the U.S. dollar. For more info on the euro, click here.
In Q3, the economy remained weak. The latest reading put quarter-on-quarter growth at -0.1%, although this may be revised ahead after growth for Germany in Q3 was revised upward to 0.0% from -0.1%. Momentum remained subdued in Q4, depressed by a muted lending environment, higher interest rates and waning savings. Germany’s economy shrank, according to preliminary data. Moreover, PMIs recorded sharper declines and economic sentiment remained downbeat. More positively, inflation fell significantly, giving households some breathing space. Meanwhile, in December, EU governments agreed to change the bloc’s fiscal framework. Under the new, more lenient, rules, each government will design a budget plan in tandem with the European Commission. Moreover, countries will be granted additional budget flexibility so long as they commit to reforms that will strengthen growth.
Projections out to 2033.

48 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 74 expert analysts.

Want to get insight on the economic outlook for Euro Area in the coming years? FocusEconomics collects projections out to 2033 on 48 economic indicators for Euro Area from a panel of 74 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Euro Area economy. To download a sample report on the Euro Area's economy, click here . To get in touch with our team for more information, fill in the form at the bottom of this page .

Euro Area Economic Data

2018 2019 2020 2021 2022
Population (million) 336 337 338 338 339
GDP (EUR bn) 11,653 12,043 11,517 12,475 13,492
GDP per capita (EUR) 34,680 35,741 34,114 36,951 39,845
Economic Growth (Nominal GDP, ann. var. %) 3.4 3.3 -4.4 8.3 8.2
Economic Growth (GDP, ann. var. %) 1.8 1.6 -6.2 5.9 3.4
Domestic Demand (ann. var. %) 1.8 2.6 -5.5 4.2 3.3
Private Consumption (ann. var. %) 1.5 1.4 -7.8 4.4 4.2
Government Consumption (ann. var. %) 1.0 1.8 1.0 4.2 1.6
Fixed Investment (ann. var. %) 3.2 6.5 -6.2 3.7 2.8
Exports (G&S, ann. var. %) 3.6 3.3 -9.4 11.4 7.4
Imports (G&S, ann. var. %) 3.8 5.0 -8.8 9.1 8.0
Industrial Production (ann. var. %) 0.8 -0.7 -7.7 8.9 2.3
Wages (ann. var. %) 2.6 2.5 3.3 1.1 4.4
Unemployment (% of active population, eop) 7.9 7.5 8.2 7.0 6.7
Unemployment (% of active population, aop) 8.2 7.6 8.0 7.7 6.7
Fiscal Balance (% of GDP) -0.4 -0.6 -7.1 -5.2 -3.6
Public Debt (% of GDP) 86.1 84.1 97.2 94.7 90.9
Money (ann. var. of M3 %) 4.2 4.9 12.3 7.0 3.8
Inflation (HICP, ann. var. %, eop) 1.5 1.3 -0.3 5.0 9.2
Inflation (HICP, ann. var. %, aop) 1.8 1.2 0.3 2.6 8.4
Inflation (PPI, ann. var. %, aop) 3.3 0.6 -2.6 12.3 34.3
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
ECB Overnight Deposit Rate (%, eop) -0.40 -0.50 -0.50 -0.50 2.00
3-Month EURIBOR (%, eop) -0.31 -0.38 -0.55 -0.57 2.13
10-Year Bond Yield (weighted avg. %, eop) 1.21 0.37 -0.09 0.28 3.00
Stock Market (Eurostoxx 50, var. %) -14.5 22.1 -3.6 21.8 -13.7
Exchange Rate (USD per EUR, eop) 1.14 1.12 1.22 1.14 1.07
Exchange Rate (USD per EUR, aop) 1.18 1.12 1.14 1.18 1.05
Current Account Balance (EUR bn) 340 296 200 346 -82
Current Account Balance (% of GDP) 2.9 2.5 1.7 2.8 -0.6
Merchandise Trade Balance (EUR bn) 271 298 333 277 -79
Foreign Direct Investment (EUR bn) 270.2 312.3 132.0 49.3 -

Q&A:

  1. What is the economic outlook for the Euro area?

  2. The economic outlook for the Euro area is uncertain. The war in Ukraine, rising energy prices, and tight monetary policy are all expected to dampen economic growth. However, the Euro area economy is still expected to grow in 2023 and 2024.

  3. Which are the largest Euro area economies?

  4. Germany is the largest economy in the Eurozone, followed by France and Italy. These three countries account for over half of the Eurozone's total GDP. Spain, the Netherlands, Belgium, and Austria are also significant economies in the Eurozone.

  5. Is the Euro area at risk of recession?

  6. The Euro area is at risk of recession, as the lagged effects of monetary tightening are expected to weigh on economic growth. The Euro area economy is already showing signs of weakness, and activity may remain downbeat in the coming quarters.

  7. What is the difference between Europe and the Euro area?

  8. Europe is a continent comprising over 50 countries with diverse economies and political systems. The Euro area, or Eurozone, specifically refers to the group of 20 European Union (EU) countries that have adopted the euro (€) as their official currency. Not all European countries are part of the EU, and not all EU members use the euro.

Free Sample Report

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