MacroResearchBoard

Contrary Alert: Is It Time For The Euro Area To Shine? – February 24, 2025

A just-published report examined the key investment issues impacting global financial markets. Clearly, trade tensions top the list, but last week’s inflation data also provided a reminder that DM inflation is not returning to 2%, and may even be drifting higher.

One theme examined in the report was whether the euro area economy was reviving after three years of sluggish growth, which developed after the war in Ukraine generated a considerable economic headwind. Economic surprises have finally turned positive and the foundations under the economy are solid. This is especially the case for the household sector, which is in its best position in terms of income, employment and savings in over two decades.

Will strong real income growth finally translate into stronger consumption? It may take some good news regarding the war or a breakthrough in fiscal policy to finally unlock the huge amount of pent-up demand in the region. Stay tuned.