Euro area’s economy weathers tariff turmoil

Abstract

The economy of the euro area has held on this year amid the considerable trade policy and geopolitical uncertainties. The tariff agreement reached by the EU with the United States has reduced the general uncertainty felt by businesses and consumers, but the tariff increases will weaken economic growth. Growth is nevertheless expected to pick up as time moves on. The drop in inflation and the lowering of interest rates have brought a positive boost to the euro area’s economy. Consumption has been supported by earnings growth and also by the sufficiency of jobs in the euro area.