Of all the eurozone countries, Germany has been hardest hit by fiscal consolidation and plummeting real estate prices
Gloomy economic forecasts for Europe. The International Monetary Fund (IMF) estimates that the eurozone economy is expected to grow by just 0.8% in 2024 and “accelerate” to 1.2% next year. Compared to similar forecasts in July, IMF analysts revised their estimates downward for both years, by 0.1% for 2024 and 0.3% for 2025, respectively.
In the eurozone, the Monetary Fund experts write, growth appears to have reached its lowest point in 2023: “Slightly weaker than the April and July 2024 forecasts, GDP growth in the single European currency area is expected to improve to a modest 0.8% in 2024 on the back of improved exports, especially goods. Growth is expected to increase further to 1.2% in 2025, especially due to the expected strengthening of domestic demand.”
In this context, “wage growth in real terms should stimulate consumption,” and gradual monetary easing, especially any new interest rate cuts by the European Central Bank, “should support investment.” According to IMF analysts, “persistent weakness in the manufacturing sector continues to weigh heavily on economic growth in countries such as Germany and Italy.”
However, as the Monetary Fund emphasized, “while Italy’s domestic demand should benefit from the European Union-funded National Recovery and Resilience Plan (PNRR), Germany is being severely hampered by fiscal consolidation and plummeting real estate prices.”
To download the full International Monetary Fund text report from Pluralia’s website (PDF , in English), follow the link