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

De Guindos cautioned against growing risks stemming from trade disruptions, financial market tensions, and geopolitical uncertainties. These factors, he warned, could significantly dampen business investment and consumer spending, pivotal drivers of economic growth.

Inflation Trends and Future Outlook

On a positive note, inflation within the euro area continued its downward trend towards the ECB's 2% target in 2024, with expectations to remain stable. However, De Guindos emphasized that global trade disruptions could pose challenges to maintaining this inflation trajectory.

"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," he remarked.