Eurozone economy picking up pace as Germany recovers

THE euro area economy will expand more quickly than previously thought this year as the bloc’s biggest member exits more than a year of near-stagnation, a Bloomberg poll of analysts showed.

Output in the 20-nation currency union will rise by 0.7 per cent in 2024 – more than the 0.5 per cent advance that was forecast in the last monthly survey. Gross domestic product in Germany is now seen increasing by 0.2 per cent compared with 0.1 per cent before.

The results, which also include upgrades to the outlooks in France, Italy and Spain, capture the improving mood in the region. First-quarter GDP readings surprised to the upside, inflation is receding toward 2 per cent and the European Central Bank is gearing up to start lowering interest rates.

Respondents in the survey predict three quarter-point reductions this year in the deposit rate, which currently stands at 4 per cent. That’s about in line with the view of money-market investors.

ECB President Christine Lagarde said last month that the eurozone economy is “recovering, and we are clearly seeing signs of recovery.”

The survey sees euro-area inflation edging toward 2 per cent over the coming quarters and hitting that level in the second quarter of next year. BLOOMBERG