The euro area's GDP growth in the fourth quarter of 2024 grew slightly by 0.1 percent, down from 0.4 percent growth in the third quarter of 2024. This signalled a deceleration likely driven by weakened consumer demand and external uncertainties. However, year-over-year growth remained stable at 0.9 percent, in line with the third quarter of 2024, suggesting a degree of resilience despite prevailing economic challenges. The stagnation in quarterly expansion raises concerns about whether the euro area can sustain growth amid geopolitical risks and inflationary pressures.

While the economy avoids contraction, this sluggish pace leaves little room for policy complacency. The ECB may face renewed pressure to balance monetary policy adjustments with economic stability. Looking ahead, fiscal stimulus or targeted interventions may be necessary to inject dynamism into the region's growth trajectory. The latest update takes the RPI to 1 and the RPI-P to 2, meaning that economic activities align with the expectations of the euro area economy.

Forecasts call for no revision from the prior report with no change on quarter and 0.9 percent growth on year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There are two preliminary estimates which are based on only partial data. The first is the preliminary flash, introduced in April 2016 and limited to just quarterly and annual growth statistics for the region as a whole. This is issued close to the end of the month immediately after the reference period. The second flash report, released about two weeks later, expands on the first to include growth figures for most member states but still provides no information on the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anaemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.