Euro Area Economic Outlook
In 2026, GDP growth should ease from 2025’s three-year high as U.S. tariffs are expected to cap export momentum. Still, low interest rates, Germany’s fiscal stimulus and stronger defense spending in the euro area should keep the rate of GDP growth not far from the long-term trend. A weaker-than-expected impact of fiscal stimulus in Germany is a downside risk.
Euro Area Inflation
In January, harmonized inflation fell to 1.7% from the previous month’s 2.0%, marking the lowest reading since April 2021. In 2026, average inflation should fall just below 2.0% and hit a six-year low amid subdued oil prices and a strong euro. Downside risks stem from the rerouting of goods from China due to U.S. tariffs.
This chart displays Economic Growth (Real GDP, ann. var. %) for Euro Area from 2010 to 2025.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| Industrial Production (ann. var. %) | -7.8 | 9.0 | 1.9 | -1.7 | -3.0 |
| Economic Growth (Real GDP, ann. var. %) | -6.2 | 6.3 | 3.7 | 0.5 | 0.9 |
| GDP per Capita (USD) | 37,756 | 42,558 | 41,155 | 44,846 | 46,459 |
| Private Consumption (annual variation in %) | -7.9 | 4.6 | 5.3 | 0.6 | 1.3 |
| Investment (annual variation in %) | -6.0 | 3.7 | 2.2 | 2.7 | -2.6 |
| Current Account Balance (% of GDP) | 1.8 | 2.7 | -0.3 | 1.6 | 2.7 |
| International Reserves (USD bn) | 1,079 | 1,197 | 1,188 | 1,268 | 1,449 |
| Merchandise Exports (USD bn) | 2,397 | 2,876 | 3,024 | 3,050 | 3,044 |
| Merchandise Trade Balance (USD bn) | 390 | 345 | -52 | 282 | 391 |
| Merchandise Imports (USD bn) | 2,007 | 2,531 | 3,077 | 2,769 | 2,653 |
| Unemployment (% of active population, aop) | 8.0 | 7.7 | 6.7 | 6.5 | 6.3 |
| Money (ann. var. of M2 %) | 11.0 | 7.1 | 3.6 | -0.8 | 3.2 |
| Policy Interest Rate (%, eop) | 0.00 | 0.00 | 2.50 | 4.50 | 3.15 |
| Public Debt (% of GDP) | 96.5 | 93.8 | 89.3 | 87.0 | 87.1 |
| Fiscal Balance (% of GDP) | -7.0 | -5.1 | -3.4 | -3.5 | -3.1 |