Euro Area Outlook 2020

What's in store for the Euro Area as we move into 2020?

  • We see Euro Area growth recovering in 2020, this will mainly be driven by an increase in global demand.
  • Signs of green shoots coming through the Euro Area surveys may mean they are reaching an inflection point.
  • We expect the ECB to go on hold for the remainder of the year.

"Our view is that euro area growth will recover going into 2020, this recovery will mainly driven by an improvement in global demand, but at the same time a supportive domestic economy."

Chiara Zangarelli - European Economist

As with the UK signs of green shoots have already shown in the euro area surveys as we have seen them bottoming up and possibly reaching an inflection point and improving.

Inflation in the euro area is currently subdued, however signs of recovery are shown by measure like seasonally adjusted inflation and supercore.

Core Measures of Euro Area Inflation

We expect the ECB to remain on hold for the remainder of the year as a result of improving data and inflation moving higher. This view is supported by the fact that several members of the ECB governing council have recently expressed their concern around the side effects of negative rates.

Looking more in detail at the euro area big four, we think that France will be the main out-performer of 2020. In Germany a manufacturing recession still continues, and while we still think there will be a recovery it will be slow. In Italy we don't expect elections going into 2020, with a fairly stable political outlook. Finally in Spain we think that their catch -up is potentially coming to an end.

Top Performing Euro Area Economies

For a more in-depth analysis of our 2020 forecast, read our full outlook here.


  • Chiara Zangarelli

    European Economist

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