Economic development of the Europea
In 2024, the European Union faces both challenges and opportunities that shape its economic growth and affect the stability of the euro against the dollar. The current situation reflects positive trends, such as falling inflation, but also structural problems that limit the dynamics of the recovery.
1. Economic growth and inflation in the EU
According to the European Commission’s latest forecasts, GDP growth in the European Union is expected to reach 0.9% in 2024, while in the euro area the growth rate will be slightly lower, namely 0.8%. These figures represent a slowdown compared to earlier expectations, but reflect a gradual recovery after several years of economic turmoil.
Inflation, which has been one of the most important problems in recent years, is falling significantly. In 2024, inflation is expected to reach 3.0% in the EU, with the euro area forecast at 2.7%, close to the European Central Bank’s (ECB) target. This decline is mainly due to a calming of energy prices and easing pressure on supply chains.
Despite these improvements, challenges remain related to the high level of indebtedness of Member States. EU public debt averages over 80% of GDP, limiting fiscal space for future investment. Another risk factor is the persistence of geopolitical tensions, which have an impact on trade and investment.
2. Development of the EUR/USD currency pair
The EUR/USD currency pair is currently trading around 1.07, reflecting the relative stability of the euro against the US dollar. The exchange rate development is influenced by several factors:
– Monetary policy divergence: while the US Federal Reserve (Fed) continues its policy of high interest rates, the ECB is signalling a cautious approach to further rate hikes. This limits the appreciation of the euro.
– Economic data: A modest recovery in the European economy combined with a decline in inflation is contributing to currency stability, but the EU’s lower growth potential compared to the US remains a significant limit to euro appreciation.
– Geopolitical influences: International trade tensions and conflicts in the EU’s immediate vicinity are affecting investor confidence and currency market stability.
Forecasts suggest that the EUR/USD exchange rate will remain relatively stable in 2024, with potential fluctuations caused by macroeconomic data or geopolitical events.
3. Future perspectives
Economic developments in the European Union in 2024 point to a moderate recovery, supported by falling inflation and stabilising energy prices. However, structural issues such as high public debt and low growth potential remain key challenges. The stability of the EUR/USD currency pair will depend on central bank policies and developments in the global economy.
The EU will have to continue to strike a balance between short-term measures to stabilise the economy and long-term investments in innovation and infrastructure to ensure its competitiveness in the global market.