Euro Area Economic Outlook
Since the start of the U.S.-Iran war, our Consensus for 2026 GDP growth in the euro area has dropped by 0.3 percentage points, reflecting the bloc’s high exposure to energy price shocks. Economic growth is now seen back at 2024’s rate in 2026, below both 2025 and the past 10-year average of 1.5%. Iran-U.S. peace talks remain key to watch.
Euro Area Inflation
In April, harmonized inflation in the euro area soared to a 31-month high of 3.0% from March’s 2.6%, remaining above the ECB’s 2.0% target for a second straight month. Average inflation should hit a three-year high this year, rising further above target due to higher energy costs. Prolonged shipping disruptions through the Strait of Hormuz are an upside risk.
This chart displays Economic Growth (Real GDP, ann. var. %) for Euro Area from 2010 to 2024.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| GDP per Capita (USD) | 42,563 | 41,161 | 44,847 | 46,465 | 50,217 |
| Economic Growth (Real GDP, ann. var. %) | 6.4 | 3.7 | 0.6 | 0.8 | 1.5 |
| Fixed Investment (ann. var. %) | 3.7 | 2.2 | 2.9 | -2.5 | 3.2 |
| Private Consumption (ann. var. %) | 4.6 | 5.3 | 0.6 | 1.3 | 1.5 |
| Unemployment (% of active population, aop) | 7.8 | 6.8 | 6.6 | 6.4 | 6.3 |
| Public Debt (% of GDP) | 93.8 | 89.3 | 86.9 | 87.0 | 87.8 |
| Fiscal Balance (% of GDP) | -5.1 | -3.4 | -3.5 | -3.0 | -2.9 |
| Merchandise Exports (USD bn) | 2,876 | 3,025 | 3,051 | 3,044 | - |
| Merchandise Imports (USD bn) | 2,531 | 3,077 | 2,769 | 2,653 | 2,847 |
| Industrial Production (ann. var. %) | 9.0 | 1.8 | -1.7 | -3.0 | 1.4 |
| Money (ann. var. of M2 %) | 7.1 | 3.6 | -0.8 | 3.2 | 3.0 |
| Merchandise Trade Balance (USD bn) | 345 | -52 | 282 | 391 | - |
| Current Account Balance (% of GDP) | 2.7 | -0.3 | 1.6 | 2.7 | 2.3 |
| Policy Interest Rate (%, eop) | 0.00 | 2.50 | 4.50 | 3.15 | 2.15 |
| International Reserves (USD bn) | 1,224 | 1,217 | 1,268 | 1,449 | - |