Eurozone
The Eurozone saw an upward revision of 0.1 percentage point to real GDP growth, which sits at 0.6% in 2023. Growth has been stagnant and is expected to remain weak in the short term.
Inflation in the Eurozone continues to decelerate and saw a 0.2 percentage point revision this quarter. The latest forecast sits at 5.7% for the bloc in 2023. Declining energy prices and rising interest rates help prevent further spikes.
In the months ahead, overall inflation should moderate further, but core inflation (which excludes food and energy) could stay elevated due to tight labour markets.
The European Central Bank (ECB) raised its key interest rates by 25 basis points in July to 4.25%. Another hike in September is possible, but the downward trend of inflation and recessionary concerns could halt an upcoming increase.
The outlook remains uncertain in a highly volatile environment. The Eurozone faces weak foreign demand with China and the US underperforming in 2024. And the ongoing war in Ukraine continues to present substantial risks to the bloc’s economy.
Recessionary risks are also looming. Additional interest rate hikes with stagnant growth could lead to a sharp economic contraction in the remainder of the year.
Eurozone: Q3 Forecasts
Source: Euromonitor International Macro Model
Note: Data from 2023 onwards is forecast, updated July 2023. Annual rates in percentages. Revisions in percentage points.
Not to be distributed without permission. The data included in this report is accurate according to Euromonitor International at the time of publication in July 2023.