QNB forecasts improving EU economic growth

Doha, Qatar: Qatar National Bank (QNB) forecast economic growth in the euro area to continue at up to 1.5 percent, a rate higher than the consensus fo...

Doha, Qatar: Qatar National Bank (QNB) forecast economic growth in the euro area to continue at up to 1.5 percent, a rate higher than the consensus forecast, supported by improved consumption conditions, a recovery in the manufacturing sector, and increased fiscal spending.

In its weekly report, the bank noted that the euro area economy has faced exceptional pressures in recent years stemming from a combination of negative factors, foremost among them unprecedented monetary tightening, the energy crisis, weak external demand, and elevated levels of global uncertainty.

The report pointed out that these challenges were reflected in the region’s economic performance, with average growth not exceeding 0.8 percent during the period from 2023 to 2025, a rate more than two-thirds lower than the average annual growth of the US economy, which stood at 2.6 percent over the same period.

QNB believes that the expected improvement in growth is based on three main factors, the first being a recovery in consumer spending, supported by improved household financial conditions and growth in real income. The euro area has succeeded in bringing inflation under control, with it stabilizing near the 2 percent target set by the European Central Bank over the past year.

In this context, the report noted that this decline allowed for the adoption of a more accommodative monetary policy, with the benchmark interest rate cut by 200 basis points from its peak of 4 percent in mid-2024 to 2 percent by June 2025.