Modest Growth Amid Challenges
European Central Bank Vice President Luis de Guindos highlighted a modest growth trajectory for the euro area in the first quarter of 2025 during his presentation of the ECB's 2024 Annual Report to the European Parliament. He pointed out that the region's economic activity began its recovery in the previous year.
Rising Risks to Economic Stability
However, de Guindos warned of increasing risks stemming from trade disruptions, financial market tensions, and geopolitical uncertainties. These factors, he noted, could significantly dampen business investment and consumer spending, posing challenges to the euro area's economic recovery.
Inflation Trends and Future Outlook
On a positive note, inflation in the euro area continued its downward trend towards the ECB's 2% target in 2024, with expectations to remain stable. Yet, the Vice President cautioned that global trade disruptions could influence future inflation trends, adding a layer of uncertainty to the economic outlook.
"Euro area exporters are now facing new barriers, and tensions in financial markets and geopolitical uncertainty will likely weigh on business investment. In this environment, consumers may become cautious about the future and hold back spending," de Guindos remarked.
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