Eurozone faces challenges such as political uncertainty in major economies, potential US tariff hikes

Euro area retail sales grew by +1.9% year-on-year (yoy) in October 2024, slower than the previous month’s +3.0%yoy but slightly exceeding market expectations of +1.7%yoy. Growth was supported by a record-low unemployment rate of 6.3%.

Key Eurozone segments saw mixed performance

• Food, beverages, and tobacco: +0.6%yoy (Sep: +0.2%yoy).

• Non-food products: Slowed to +2.7%yoy (Sep: +5.5%yoy).

• Automotive fuel: +1.9%yoy (Sep: +2.1%yoy).

Among member states, Luxembourg, Romania, and Croatia led growth, while Finland, Belgium, and Estonia recorded the sharpest declines.

On a monthly basis, retail sales declined by -0.5% month-on-month (mom), reversing September’s growth of +0.5%mom and falling short of the expected -0.3%mom, mainly due to weaker sales in food, beverages, and fuel.

Challenges and risks

The bloc faces challenges such as political uncertainty in major economies, potential US tariff hikes, and structural issues in the automotive sector, increasing recession risks. However, these headwinds may encourage authorities to adopt more supportive economic policies to stimulate growth.

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