IMF: Euro area to pick up to a modest 0.8% in ’24

The International Monetary Fund (IMF) on Tuesday made a slight downward revision of 0.1 percentage point for its growth outlook for the euro area for 2024 compared to its July estimates.

According to its latest World Economic Outlook released on Tuesday, the IMF forecasts the euro area to pick up to a modest 0.8 percent in 2024 driven by improved export performance, particularly in goods.

The IMF said growth is expected to rise further to 1.2 per cent in 2025, supported by stronger domestic demand and rising real wages, which will boost consumption. A gradual easing of monetary policy is anticipated to facilitate investment.

“In the euro area …, A touch weaker than projected in April and July 2024, GDP growth is expected to pick up to a modest 0.8 percent in 2024 as a result of better export performance, in particular of goods. In 2025, growth is projected to rise further to 1.2 percent, helped by stronger domestic demand.” the report read.

However, challenges remain, particularly for Germany and Italy, where persistent weakness in manufacturing is affecting growth. Italy’s domestic demand is likely to benefit from the EU-funded National Recovery and Resilience Plan, while Germany faces pressure from fiscal consolidation and declining real estate prices.

“Persistent weakness in manufacturing weighs on growth for countries such as Germany and Italy. However, whereas Italy’s domestic demand is expected to benefit from the European Union–financed National Recovery and Resilience Plan, Germany is experiencing strain from fiscal consolidation and a sharp decline in real estate prices.”

Attribution: IMF world economic outlook October 2024

Subediting: Y.Yasser