{
  "title": "Regional Economic Outlook for Europe, October 2024: A Recovery Short of Europe’s Full Potential",
  "publication": "Regional Economic Outlook, October 2024",
  "sourceUrl": "https://www.imf.org/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024",
  "canonical": "https://www.imf.org/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024",
  "overlayPath": "/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/index.md",
  "summary": "Europe’s economy is recovering, benefiting from a strong crises’ response. Yet, the recovery is falling short of its full potential. Uncertainty about persistent core inflation, policy directions, and geopolitical conflicts, is dampening the near-term outlook.",
  "publishDate": "2024-10-24",
  "sections": [
    {
      "heading": "Overview and key findings",
      "content": "- Europe’s economy is recovering, benefiting from a strong crises’ response, but the recovery is falling short of its full potential.\n- Uncertainty about persistent core inflation, policy directions, and geopolitical conflicts is dampening the near-term outlook.\n- In the longer term, weak productivity growth—attributed to limited scale and business dynamism—together with new headwinds from fragmentation and climate change, are holding back growth potential.\n- Steady macro policies are needed to navigate an uncertain environment:\n  - Transition to a neutral monetary policy stance.\n  - Reduce fiscal deficits without jeopardizing the recovery.\n- A larger and more integrated single market for goods, services, and capital will incentivize investment, innovation, and generate scale benefits.\n- Deepening European integration will strengthen economic resilience by insulating businesses and labor markets from global fragmentation pressures."
    },
    {
      "heading": "Note One — Europe’s Declining Productivity Growth: Diagnoses and Remedies",
      "content": "- Europe’s widening productivity gap with the U.S. has deep firm-level roots:\n  - Compared to the U.S., Europe’s leading firms innovate and grow less.\n  - Young high-growth firms have a smaller footprint in the economy and tend to remain small.\n- Identified bottlenecks:\n  - Smaller markets.\n  - Limited equity financing, which hinder leading firms from innovating and scaling up, particularly in tech sectors.\n- Policy and structural remedies highlighted:\n  - Increase human capital investment.\n  - Greater availability of risk capital.\n  - Improve the design and coordination of public support to R&D and education systems.\n  - Remove intra-Europe barriers to factor and product markets integration to improve business dynamism and revive productivity growth.\n  - Domestic reforms to lower barriers to firm entry, facilitate exit, and remove tax and regulatory disincentives to grow."
    },
    {
      "heading": "Note Two — Accelerating Europe’s Income Convergence through Further Integration",
      "content": "- Economic convergence is required to raise Europe’s growth, meaning activity should expand fastest where opportunities are largest.\n- Historical evidence from the early 2000s:\n  - EU accession acted as a catalyst for convergence through effective integration and structural reforms, improving connectedness for old and new member states.\n  - Due to EU accession, average regional GDP per capita in new member states increased by more than 30 percent, with larger gains for poorer regions.\n  - Productivity catch-up was driven by innovation and higher educational attainment, along with substantial capital investment, primarily through FDI.\n- Recent developments and prospects:\n  - Productivity growth has slowed more recently.\n  - Based on new estimates, Europe’s income gap to the US could be reduced by around 10 percentage points through a new enlargement round.\n  - If enlargement is paired with deeper integration to reduce remaining barriers within the EU, the benefits could be magnified."
    },
    {
      "heading": "Policy implications and priorities",
      "content": "- Maintain steady macroeconomic policies to support recovery while addressing vulnerabilities:\n  - Transition monetary policy to a neutral stance.\n  - Reduce fiscal deficits in a manner that does not jeopardize the recovery.\n- Structural and regional policies to boost potential growth:\n  - Remove intra-Europe barriers to factor and product market integration.\n  - Expand the scale of markets to foster firm growth and innovation.\n  - Enhance access to risk capital and reform public support for R&D and education.\n  - Pursue domestic reforms to lower barriers to firm entry, facilitate exit, and eliminate tax and regulatory disincentives to grow.\n- Deepen European integration and consider enlargement to accelerate income convergence and strengthen resilience to fragmentation.\n\nRegional Economic Outlook — Europe, October 2024\n\n---\n\n Content in this bundle\n\n- Reoeurnote1\n  - Reoeurnote1 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Reoeurnote1 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Reoeurnote2\n  - Reoeurnote2 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Reoeurnote2 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Full Report\n  - Full Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Full Report (PDF){rel=\"external\" type=\"application/pdf\"}\n- Executive Summary\n  - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n- Executive Summary\n  - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Note One Blog\n- Note Two Blog\n- Transcript\n- Press Conference\n- Remarks at the House of the Euro\n- Blog\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/index.md)",
    "[Structured JSON version](/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/index.json)",
    "[Bundle manifest](/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/bundle-manifest.json)",
    "Published: October 24, 2024",
    "Europe’s economy is recovering, benefiting from a strong crises’ response, but the recovery is falling short of its full potential.",
    "Uncertainty about persistent core inflation, policy directions, and geopolitical conflicts is dampening the near-term outlook.",
    "In the longer term, weak productivity growth—attributed to limited scale and business dynamism—together with new headwinds from fragmentation and climate change, are holding back growth potential.",
    "Steady macro policies are needed to navigate an uncertain environment:",
    "A larger and more integrated single market for goods, services, and capital will incentivize investment, innovation, and generate scale benefits.",
    "Deepening European integration will strengthen economic resilience by insulating businesses and labor markets from global fragmentation pressures.",
    "Europe’s widening productivity gap with the U.S. has deep firm-level roots:",
    "Identified bottlenecks:",
    "Policy and structural remedies highlighted:",
    "Economic convergence is required to raise Europe’s growth, meaning activity should expand fastest where opportunities are largest.",
    "Historical evidence from the early 2000s:",
    "Recent developments and prospects:",
    "Maintain steady macroeconomic policies to support recovery while addressing vulnerabilities:",
    "Structural and regional policies to boost potential growth:",
    "Deepen European integration and consider enlargement to accelerate income convergence and strengthen resilience to fragmentation.",
    "**Reoeurnote1**",
    "**Reoeurnote2**",
    "**Full Report**",
    "**Executive Summary**",
    "**Executive Summary**",
    "[Note One Blog](https://www.imf.org/en/Blogs/Articles/2024/09/11/how-to-awaken-europes-private-sector-and-boost-economic-growth)",
    "[Note Two Blog](https://www.imf.org/en/Blogs/Articles/2024/12/03/the-2004-eu-enlargement-was-a-success-story-built-on-deep-reform-efforts)",
    "[Transcript](https://www.imf.org/en/News/Articles/2024/10/24/tr102424-transcript-of-eur-reo)",
    "[Press Conference](https://www.imf.org/en/Videos/view?vid=6363744360112)",
    "[Remarks at the House of the Euro](https://www.imf.org/en/news/articles/2024/11/18/sp111424-scaling-up-the-single-market-to-boost-productivity)",
    "[Blog](https://origin-blogs.imf.org/en/blogs/articles/2024/12/03/the-2004-eu-enlargement-was-a-success-story-built-on-deep-reform-efforts)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "related": [
    {
      "title": "Reoeurnote1",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/reo/eur/2024/october/english/reoeurnote1.pdf",
      "summary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/english/reoeurnote1.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/english/reoeurnote1.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "Reoeurnote2",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/reo/eur/2024/october/english/reoeurnote2.pdf",
      "summary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/english/reoeurnote2.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/english/reoeurnote2.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "Full Report",
      "role": "full-report",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/reo/eur/2024/october/english/text.pdf",
      "summary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/english/text.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/english/text.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "Executive Summary",
      "role": "executive-summary",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/reo/eur/2024/october/polish/execsum.pdf",
      "summary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/polish/execsum.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/polish/execsum.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "Executive Summary",
      "role": "executive-summary",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/reo/eur/2024/october/turkish/execsum.pdf",
      "summary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/turkish/execsum.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/reo/eur/2024/october/turkish/execsum.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/index.md",
    "json": "/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/index.json",
    "bundleManifest": "/en/publications/reo/eu/issues/2024/10/24/regional-economic-outlook-europe-october-2024/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-23T18:53:54.611Z"
}