Euro Area Economic Outlook
GDP growth should rise in 2025 from 2024. ECB rate cuts and lower inflation will boost private spending and fixed investment. However, our panelists cut their exports growth projections further in recent weeks as U.S. tariff threats materialized. Additional U.S. tariffs cloud the outlook, while the health of Germany’s industrial sector remains a key factor to track.
Euro Area Inflation
In February, harmonized inflation decreased to 2.3% from January’s 2.5% due to softer price pressures for energy and services. Inflation is forecast to ease further in the coming months amid moderating commodity prices and should hover around the ECB’s 2.0% target at end-2025. Faster-than-expected wage growth and escalating EU-U.S. trade tensions pose upside risks.
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) | 38,947 | 43,834 | 42,216 | 45,905 | 47,498 |
| Economic Growth (Real GDP, ann. var. %) | -6.2 | 6.3 | 3.6 | 0.5 | 0.8 |
| Private Consumption (annual variation in %) | -7.9 | 4.7 | 5.0 | 0.6 | 1.0 |
| Investment (annual variation in %) | -6.0 | 3.7 | 2.1 | 1.9 | -1.9 |
| Industrial Production (ann. var. %) | -7.8 | 9.0 | 1.8 | -1.6 | -3.0 |
| Unemployment (% of active population, aop) | 8.0 | 7.8 | 6.7 | 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 | 2.7 |
| Merchandise Trade Balance (USD bn) | 390 | 345 | -48 | 285 | 402 |
| Merchandise Exports (USD bn) | 2,397 | 2,876 | 3,023 | 3,055 | 3,069 |
| Merchandise Imports (USD bn) | 2,007 | 2,530 | 3,071 | 2,770 | 2,666 |
| International Reserves (USD bn) | 1,079 | 1,197 | 1,187 | 1,267 | 1,448 |
| Money (ann. var. of M2 %) | 11.0 | 7.0 | 3.5 | -0.8 | 3.1 |