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Euro area GDP growth is projected to slow to 0.9% in 2023 and then gradually strengthen to 1.5% in 2024. Private consumption will be supported by strong labour markets, but higher costs of financing and uncertainty will weigh on private investment. The tight labour market will continue to fuel wage growth in 2023, before wages start gradually easing in 2024. Lower energy and food prices will help reduce headline inflation in 2023, but core inflation will remain elevated. Risks remain tilted to the downside as another spike in energy prices could reignite the energy crisis, and restrictive monetary policy could expose existing financial sector vulnerabilities. Persistent inflation, declining incomes and elevated uncertainty following recent turmoil in the banking sector call for coordinated and resolute policy actions. Fiscal measures adopted during the energy crisis need to be gradually withdrawn to rein in public debt and avoid providing fiscal stimulus at a time of high inflation. Monetary conditions need to remain tight to durably lower inflation. Euro area 1
1. Data refer to the euro area including 20 member countries. 2. Age group 15 and over. 3. Dispersion measures refer to the individual euro area countries. Source: OECD Short-term Labour Statistics database; Eurostat Harmonised index of consumer prices (HICP) database; and OECD calculations. StatLink 2 https://stat.link/d1kg2h
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023