Euro Area Economic Outlook
The economy should grow at a muted pace this year. The lagged effects of past monetary tightening and a weaker industrial sector will weigh on growth, while a resilient labor market, recovering external demand, EU funds disbursements and falling inflation will support activity. Potential financial turbulence, coupled with high public debt loads, poses a risk.
Euro Area Inflation
Harmonized inflation fell to 2.6% in February (January: 2.8%) on softer increases in prices for food, non-energy industrial goods, and alcohol and tobacco. Inflation will subside markedly this year from 2023’s average on the lagged effects of previous rate hikes and a high base effect. Wage-price spirals and commodity price spikes are upside risks.
This chart displays Economic Growth (GDP, ann. var. %) for Euro Area from 2010 to 2023.
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| GDP per capita (USD) | 40,005 | 38,889 | 43,678 | 41,923 | 45,682 |
| 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 | -6.1 | 3.7 | 2.6 | 1.4 |
| Industrial Production (ann. var. %) | -3.3 | 1.6 | 4.6 | -2.4 | 0.2 |
| Unemployment (% of active population, aop) | 7.6 | 8.0 | 7.7 | 6.7 | 6.5 |
| Fiscal Balance (% of GDP) | -0.5 | -7.0 | -5.2 | -3.7 | -3.6 |
| Public Debt (% of GDP) | 84.1 | 97.2 | 94.8 | 90.8 | 88.6 |
| 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 | 1.6 | 2.7 | -0.7 | 1.6 |
| Merchandise Trade Balance (USD bn) | 334 | 370 | 330 | -80 | 266 |
| Merchandise Exports (USD bn) | 2,667 | 2,478 | 2,966 | 3,116 | 3,122 |
| Merchandise Imports (USD bn) | 2,333 | 2,108 | 2,636 | 3,196 | 2,857 |
| 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 |