Euro area's real GDP growth to be below 1% in 2024, 1.1% in 2025: TCB

The US think tank’s leading economic index (LEI) for the area declined by 0.7 per cent in September this year to 95.2 following a decline of 0.8 per cent in August. As a result, the LEI contracted by 4.3 per cent over the six-month period from March to September 2024, a slightly higher rate of decline than the 4.1-per cent contraction over the previous six-month period.

Its coincident economic index (CEI) for the euro area inched up by 0.1 per cent in September to 108.6 following no change in August. The CEI grew by a muted 0.1 per cent over the six-month period from March to September 2024, weaker growth than the 0.5 per cent over the previous six-month period.

The LEI provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term, whereas the CEI offers an indication of the current state of the economy.

“The Euro Area LEI continued to deteriorate in September, remaining on the downward trend that has prevailed for over two years” said Ian Hu, economic research associate at the think tank.

“The majority of components, save the systemic stress indicator and stock prices, contributed to the deterioration to the LEI. Additionally, over a six-month period, all components, except for the systemic stress indicator, contributed negatively, especially the yield spread, manufacturing new orders, and consumer expectations. Consequently, both the six- and twelve-month growth rates of the LEI remain deeply negative, pointing towards continued headwinds to growth,” he said.

“With euro area inflation falling below the European Central Bank’s (ECB) 2.0-per cent objective, two additional interest rate cuts are expected by the end of 2024, which should lessen these headwinds,” he added.

Fibre2Fashion News Desk (DS)