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Recent Economic Developments

The euro area economy expanded by an estimated 0.9% in 2024. Growth was hampered by weak consumption, business investment, and industrial activity. High energy prices earlier in the year reduced competitiveness, dampening exports and domestic demand.  
 
Manufacturing and industrial production remained subdued, particularly in Germany, which accounts for nearly 30% of the euro area’s GDP. High-frequency indicators point to ongoing weakness across the sector.   

Private consumption gradually improved over 2024, supported by easing inflation and modest real economic gains. However, the upturn has been limited by low consumer confidence amid heightened uncertainty. Survey data shows that households remain cautious, with saving intentions still high.  

Economic Outlook

Euro area growth is forecast to remain weak in 2025, with GDP projected to expand by less than 1%. This pace remains below potential growth estimates. The short-term outlook is clouded by persistent challenges, including rising global trade barriers, policy uncertainty, competitiveness losses, and fragile consumer sentiment.   

The overall outlook remains uncertain. Stronger growth will depend on improvements in trade and investment—areas that have faced sustained pressure in recent years. Despite headwinds, there are some sources of support. In several euro area economies, additional fiscal spending is expected to provide a modest boost to growth over the next few years, which could help counteract recent global shocks and bolster medium-term prospects. 

Last Updated: May 06, 2025

The World Bank in the European Union

In the European Union, the World Bank helps Member States achieve their development objectives by helping countries navigate near-term challenges, build resilience, advance the green transition, and undertake critical structural reforms. Our longstanding, multidimensional partnership with both Member States and EU institutions spans knowledge exchange, financial cooperation, contributions to global public goods such as climate action, and sharing important development lessons from EU countries with the rest of the world.

The World Bank offers client countries within the EU financial and knowledge services. Currently, four countries – Bulgaria, Croatia, Poland, and Romania – benefit from the full portfolio of World Bank instruments. Our lending focuses on catalytic operations that help these countries pursue reforms in transformative development areas, such as social protection, provision of public services, and support for a thriving private sector.

In addition, the World Bank has a large program of advisory services in EU countries, including technical assistance and economic analysis. Such work is financed through Reimbursable Advisory Services or trust funds carried out in partnership with the European Commission (EC).

These engagements, combined with the World Bank’s support for institutional strengthening and foundational analytical work, help countries prepare with the implementation of EU policies and EU financial instruments, including through the National Recovery and Resilience Plans (NRRPs).

Long-Term Engagements

The World Bank's engagement with EU countries is focused around three themes: (i) improving human capital outcomes; (ii) creating better jobs and opportunities for all; and (iii) increasing resilience and accelerating the green transition. These priorities are closely aligned with those of partners including the EC, with whom the WB works closely at technical and strategic levels.

Examples of the Word Bank's work in these areas include:

Improving Human Capital Outcomes

The World Bank works to advance service delivery to underserved groups, including through analytical work on Roma inclusion and lagging regions. In Romania, a EUR600 million Development Policy Operation supports the government’s efforts to integrate displaced people as well as advance critical structural reforms.

With the help of the World Bank’s RAPID education framework and support from the European Union, Romania is deploying strategies to reduce growing disparities between rural and urban areas by focusing on disadvantaged students and accelerating learning from early childhood to tertiary education.

In Croatia, the  is supporting the introduction of the “whole day school” system, which is designed to improve student learning outcomes, particularly among disadvantaged students, through increased instructional hours and improved teacher training and school infrastructure. 

Better Jobs and Opportunities for All

In EU countries, technology adoption has increased productivity, demand for skilled graduates, and market concentration – leading to a growing divide among workers with the requisite skills and others, and between smaller and larger businesses. The World Bank’s recent Future of Work report lays out what governments can do to close this divide and promote inclusive opportunities. A demonstrates how the country could build on the success of its booming IT sector and further boost its services sector by improving digital skills, increasing enrollment in tertiary education, and enhancing management practices.

Increasing Resilience and Accelerating the Green Transition

The World Bank is supporting several EU countries with advisory services on their energy security agenda while advancing the transition away from coal. One aim of this work is to ensure the transition works for the most vulnerable, for example through analytical work on how green fiscal reforms can help protect vulnerable households.

The recent World Bank Country Climate and Development Report for Romania presents options for the country to meet its pledge of carbon neutrality by 2050 while substantially increasing national income and boosting resilience to climate change. The report identifies transport and water as two sectors needing urgent investment for both climate adaptation and mitigation. 

Last Updated: Mar 27, 2024