Economic momentum in Europe has steadily improved throughout 2024, despite a slower start than anticipated. Early forecasts from April predicted modest growth for the region, particularly in advanced economies. The euro area was expected to see growth driven by strong private consumption and exports, with real GDP initially forecast to increase by 0.8% in 2024 and 1.5% in 2025. By mid-year, the IMF revised its outlook for the euro area, reporting stronger growth than initially projected. By July, the eurozone’s growth forecast was raised to 0.9% for 2024, reflecting a more synchronised pace with other major economies.
The steady improvement in private consumption is a major factor in this recovery. Oxford Economics has projected that personal consumption in the eurozone will grow by 1.1% in 2024, supported by ongoing increases in wages and employment. This rise in consumption is vital for the region’s broader economic recovery as it boosts demand for a wide range of goods and services, fueling economic activity.
This upward shift in personal consumption has notable implications for the industrial and logistics property sector. As consumer spending grows, so does the need for goods movement, which increases demand for storage and distribution facilities. Retailers and manufacturers are likely to require additional warehouse space to manage growing inventories and ensure efficient distribution, further supporting the property sector.
Monetary policy decisions have also played a role in stimulating this growth. The European Central Bank (ECB) cut its key interest rates in June 2024, bringing the main refinancing operations rate down to 4.25%. Shortly after, in August 2024, the Bank of England (BoE) followed suit, reducing its interest rate from 5.25% to 5%. These rate cuts make borrowing more affordable, allowing consumers to access loans and mortgages more easily, further stimulating private consumption.
The positive outlook for Europe’s economy is reinforced by the IMF’s 2024 projections, which highlight the central role of rising private consumption and strong export performance. This economic growth will have a significant impact on sectors closely tied to consumer activity, particularly the industrial and logistics property markets. As consumer demand for goods, e-commerce growth, and supply chain efficiency all rise, so too will the need for more warehouses and logistics facilities to accommodate this expansion.
2024 is shaping up to be a year of economic recovery and growth for Europe. With increased private consumption driving demand across multiple sectors and supportive monetary policies in place, the outlook is optimistic for both the economy and the industrial property market.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
