Euro Area Economy Set for Faster Growth in 2024, Thanks to Improving Economic Indicators and Monetary Policies

The euro area economy is expected to experience faster growth this year than previously anticipated, according to a Bloomberg survey of analysts. The 20-nation currency union’s output is projected to rise by 0.7% in 2024, up from the earlier forecast of 0.5%. This growth is largely driven by Germany, which is now expected to see a 0.2% increase in GDP compared to the earlier prediction of 0.1%.

Survey results also show that other major economies like France, Italy, and Spain are experiencing positive outlooks for their respective regions. Better-than-expected first-quarter GDP readings, a gradual decline in inflation towards the 2% target, and preparations by the European Central Bank to lower interest rates have contributed to the improving mood of the euro area.

ECB President Christine Lagarde remarked last month that the euro zone economy is on a path to recovery, with clear signs of improvement visible. Survey respondents anticipate three quarter-point reductions in the deposit rate by the ECB this year, which currently stands at 4%. This aligns with the expectations of money-market investors.

The economic recovery in the euro area is projected to continue gaining momentum throughout the year with supportive monetary policies and improving economic indicators.