Recent Economic Developments
The euro area economy expanded by an estimated 0.9% in 2024. Growth was hampered by weak consumption, business investment, and industrial activity. High energy prices earlier in the year reduced competitiveness, dampening exports and domestic demand.
Manufacturing and industrial production remained subdued, particularly in Germany, which accounts for nearly 30% of the euro area¡¯s GDP. High-frequency indicators point to ongoing weakness across the sector.
Private consumption gradually improved over 2024, supported by easing inflation and modest real economic gains. However, the upturn has been limited by low consumer confidence amid heightened uncertainty. Survey data shows that households remain cautious, with saving intentions still high.
Economic Outlook
Euro area growth is forecast to remain weak in 2025, with GDP projected to expand by less than 1%. This pace remains below potential growth estimates. The short-term outlook is clouded by persistent challenges, including rising global trade barriers, policy uncertainty, competitiveness losses, and fragile consumer sentiment.
The overall outlook remains uncertain. Stronger growth will depend on improvements in trade and investment¡ªareas that have faced sustained pressure in recent years. Despite headwinds, there are some sources of support. In several euro area economies, additional fiscal spending is expected to provide a modest boost to growth over the next few years, which could help counteract recent global shocks and bolster medium-term prospects.
Last Updated: May 06, 2025