While economic growth at the start of 2024 was slightly slower than initially hoped, momentum has gradually grown through the year. Initially, the April outlook projected modest growth for Europe, with growth prospects for the advanced economies in the region improving. The euro area, in particular, was anticipated to experience stronger growth, driven by resilient private consumption and exports, with real GDP forecast to grow by 0.8% in 2024 and 1.5% in 2024. By July, the IMF’s update confirmed that growth in the euro area was indeed picking up, aligning more closely with other major advanced economies. The euro area’s economic growth for 2024 was revised upwards to 0.9% in 2024, with Europe’s economic growth becoming more synchronised with other advanced economies.

Oxford Economics has forecast personal consumption in the eurozone of  1.1% in 2024, driven by continued wage and employment growth. This growth in private consumption is a key factor in the region’s economic recovery, as it boosts demand for goods and services.

The improvement in Europe’s economic outlook, particularly the rise in personal consumption, has significant implications for the industrial and logistics property sector. Increases in personal consumption fuel the movement of goods through the economy, boosting demand for storage and distribution facilities. This should boost demand amongst retailers and manufacturers who will require more warehouse space to store inventory and manage distribution efficiently.

Recent monetary policy decisions by the ECB and the BoE to cut interest rates are expected to support consumer spending further. The ECB lowered its key interest rates in June 2024, reducing the main refinancing operations rate to 4.25%. Similarly, the BoE cut its interest rate from 5.25% to 5% in August 2024. Lower interest rates reduce the cost of borrowing for consumers, making loans and mortgages more affordable, boosting private consumption.

The IMF’s economic outlooks for 2024 highlight a positive trajectory for Europe’s economy, driven by strong private consumption and robust exports. Growth in the wider economy will have a significant impact on the pro-cyclical components of the industrial and logistics property sector. Growing private consumption will boost demand for warehouses and logistics facilities, spurred by higher consumer goods demand, e-commerce growth, and supply chain efficiency.

_{Read the articles within Spotlight: European Logistics Outlook – Q2 2024 below.}