Eurozone
The Eurozone is expected to stay stagnant through 2024 due to the lagged effects of monetary tightening and a weaker industrial sector. Real GDP growth was revised downward to a modest 0.7% for the year.
Inflation should remain on a decline, but persistent price pressures from tight labour markets and a volatile commodities sector are the major upside risks here. The lastest Euromonitor forecast shows an inflation rate of 2.4% for 2024—a downward revision of 0.3 percentage points from Q1 and a significant drop from 5.3% in 2023.
The outlook for the Eurozone economy remains highly uncertain. Growth momentum should accelerate over the year as inflation eases, interest rates drop and foreign demand recovers.
But these developments are dependent on the external environment, resulting in higher probabilities of risks like the Europe downturn scenario. In this scenario, a resurgence of inflation would force interest rate hikes, pushing the Eurozone into a recession in 2024.
However, current projections point towards a growth acceleration in 2025 for the bloc as a resilient labour market, recovering external demand and falling inflation continue to support economic activity.
Eurozone: Real GDP Growth and Inflation
Source: Euromonitor International Macro Model
Note: Annual rates in percentages. Revisions in percentage points.
