The euro area economy is expected to grow more quickly this year than previously anticipated, with a projected increase of 0.7% in output for the 20-nation currency union, up from the earlier forecast of 0.5%, according to a Bloomberg survey of analysts. 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%.
The positive outlook for the euro area also extends to other major economies like France, Italy, and Spain, as reflected in the survey results. The region’s improving mood is attributed to better-than-expected first-quarter GDP readings, a gradual decline in inflation towards the 2% target, and preparations by the European Central Bank (ECB) to lower interest rates.
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. ECB President Christine Lagarde remarked last month that the euro zone economy is on a path to recovery, with clear signs of improvement visible.
It is projected that the economic recovery in the euro area will continue to gain momentum throughout the year, driven by supportive monetary policies and improving economic indicators.
