Economic Outlook Quarterly: A soft landing within reach

Summary:

The European Union's economic outlook for 2024 reflects cautious optimism, with gross domestic product (GDP) growth estimated at 1.0 % for the EU and 0.8 % for the euro area. As inflation is projected to continue declining towards the European Central Bank's 2 % target by 2025, a soft landing is within reach. Near-term growth is mainly driven by real wages and private consumption, while high interest rates keep private investment sluggish. This marks a slight improvement from the previous forecast for the EU, while the euro area forecast remains unchanged. Economic expansion in southern EU countries continues to outpace that of those in the north and west, promoting convergence. Unemployment rates continued to fall in the Member States with the highest rates, leading to a further reduction in disparities across the EU.

Overall, the EU unemployment rate at the beginning of 2024 stood at a record low of 6.0 %. This positive momentum coincides with the 20th anniversary of the EU's enlargement to 10 additional Member States, highlighting the single market's beneficial integration effects. Launched as a response to the socioeconomic impact of the COVID-19 pandemic, Next Generation EU (NGEU) and its Recovery and Resilience Facility (RRF) have also supported recovery and economic convergence in the EU. Against the backdrop of new EU fiscal rules, in place as of this year, NGEU and the RRF are expected to continue playing a significant role in financing strategic investment and reform up to 2026. In that context, this publication aims to track the state of the EU economy. It builds on a well-established EPRS series, 'Monitoring the EU's economic outlook', becoming quarterly.

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