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Research briefing session
| October 17, 2024
Hopes that a recovery in consumer spending would drive eurozone growth in 2024 did not materialize. Growth in consumer spending remains unimpressive, reflecting the sluggish momentum of the overall economy. Consumption growth is expected to remain sluggish at 0.8% this year and 1.5% in 2025.
What you will learn:
- Austere monetary policy remains a major headwind for consumer spending. Households continue to move liquid savings into term deposits to take advantage of high deposit interest rates. Tight credit conditions are also suppressing demand for durable goods.
- Interest rate cuts will gradually help, but there are warning signs in the labor market. Unemployment is currently expected to increase modestly in 2025, which should moderate real income growth and encourage precautionary savings.
- Our forecast risk is balanced and moderate. If interest rates are cut further ahead of schedule, spending in 2025 could be pushed up by 0.2 points. Conversely, a more severe deterioration in the labor market could reduce spending growth in 2025 by 0.4 percentage points.
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