European economy does not grow

Along with 20 countries using Euro coins, the European Union’s economy (EU, including 27 member countries) only grew 0.1% in the fourth quarter of 2024. Meanwhile, GDP in the third quarter of Eurozone and EU both increased by 0.4%.

The European economy stagnated when the previous growth motivation of the region was Germany decreased by 0.2% in the last quarter of last year. The regional economic leader is facing many difficulties, including losing cheap energy from Russia, bulky administrative apparatus and political deadlock in Berlin.

France and Italy, two other major economies in the region, are not positive, respectively decreased 0.1% and passes (0%). The strongest GDP in the previous quarter was Portugal, at 1.5%. The remaining Eurozone’s other economies grew below 1%.

In 2024, Euroost estimated Eurozone GDP increased by 0.7% while the EU reached 0.8%. Prospects for 2025 are not very positive.

The leading economies in Europe such as Germany and France are all unstable due to political fluctuations that make businesses and consumers insecure in the future, related to government spending, regulations and taxes. After months of trapped in controversy over economic management, Prime Minister Olaf Scholz’s ruling alliance collapsed in November 2024. The confused political situation can be resolved after the general election on February 23.

However, the German government on January 29 still reduced the growth forecast of this year to 0.3%, from 1.1%. Meanwhile, France can take a long time to stabilize politics, because the National Assembly is deeply divided. The factions disagree about how to resolve the budget deficit and the earliest election until July takes place.

Business prospects in Europe were also affected when Mr. Trump returned to the White House. The stance of increasing import tax of the US can harm the EU’s export -oriented economy.

In addition, the consumption of electric vehicles slowed down and Germany canceled benefits to buyers of this vehicle also affecting the needs. The European Central Bank (ECB) is expected to reduce interest rates this week to promote growth. The ECB must consider the low interest rate factor to make it easier to access capital, but also worsen inflation. Inflation has increased in recent months, reaching 2.4% in December 2024, due to the increase in energy prices.

Consumer psychological measurements, such as economic confidence indicators published by the European Commission, shows that people are concerned about prices. According to Oxford Economics, the expectation of escalating inflation can increase obstacles for private consumption prospects, especially when European households are more cautious in spending.