1、2023 has been a mixed year for the Euro area.I nitial l y,the economy showednsurprising resil ience to the energy crisis,defying expectations for recession.Growth has disappointed since the spring,however,reflecting ongoing negativeeffects from high gas prices,a l arge drag from monetary tightening

2、and weakgl obal industrial activity.As a resul t,Euro area growth underperformed the USnotabl y this year.We expect 2024 to be a better year for the Euro area economy for three reasons.nFirst,we l ook for growth to pick up as these headwinds diminish.Realdisposabl e income is set for a notabl e boos

3、t as headl ine inflation sl ows sharpl yand nominal wage growth remains firm,supporting consumer spending.Thenegative credit drag shoul d recede notabl y in H1 as the ECB hol ds rates steady.And we l ook for manufacturing growth to normal ise,even though the upside isl imited as the gl obal industri

4、al environment remains mixed.We expect these receding headwinds to more than outweigh a rising fiscal dragnand l ook for area-wide growth of 0.9%next year,sl ightl y ahead of consensus.Looking across countries,we expect 0.6%in Germany,1.1%in France,0.7%inI tal y and 1.7%in Spain.Second,we expect und

5、erl ying inflation to normal ise in 2024.Core inflation hasncool ed more than expected in recent monthswith sequential core inflationnow running at around 2%and wage growth is showing cl ear signs ofdecel eration.We expect the l abour market to remain broadl y resil ientwith onl ya modest increase i

6、n the unempl oyment ratebut l ook for the normal isation inwage growth to continue,as the effects of past high headl ine inflation fade.Wel ower our proj ection for core inflation over the next year and now expect coreinflation to fal l to 2.7%yoy by mid-2024(vs 2.9%yoy before).Third,we l ook for a