Euro Area projection note OECD Economic Outlook November 2023

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Euro area GDP growth is projected to slow to 0.6% in 2023 before strengthening gradually to 0.9% in 2024 and 1.5% in 2025. Private consumption will be supported by tight labour markets and increasing real incomes as inflation recedes. At the same time, higher costs of financing and uncertainty will weigh on private investment. Wage growth is projected to ease only gradually over the projection period. Employment bottlenecks in services will keep core inflation elevated until mid-2025, despite ongoing reductions in headline inflation. Persistent core inflation, the rising impact of higher interest rates on the real economy and uncertainty associated with increasing geopolitical risks call for coordinated macroeconomic policies. Prudent fiscal policy is needed to rebuild fiscal space, while the European fiscal rules should be refocused on debt sustainability and multiannual expenditure plans. Monetary conditions need to remain tight to ensure continued disinflation. Euro area 1

1. The job vacancy rate measures the proportion of total posts that are vacant, expressed as the ratio of the number of job vacancies to the number of occupied posts plus the number of job vacancies. Source: OECD Labour Statistics database; Eurostat Job vacancy statistics database; Eurostat Harmonised index of consumer prices (HICP) database; and LSEG. StatLink 2 https://stat.link/t2164a

OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 2: PRELIMINARY VERSION © OECD 2023


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