Eurozone consumer confidence took a sharp hit in April, casting doubt on expectations for a consumption-driven economic rebound in 2025. According to the European Commission’s flash estimate, consumer sentiment fell to -16.7, down from -14.5 in March and well below the market consensus of -15.5.
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Consumer Confidence Plunges Following “Liberation Day” Tariff Announcements
This marks the first major sentiment indicator released since the “Liberation Day” tariff announcements—an event that has significantly increased trade uncertainty across the bloc. The disappointing data suggests consumers may be growing more cautious, potentially undermining hopes for a robust recovery fueled by domestic spending.
While consumer confidence is known to be more volatile than actual household spending, the sharp decline raises concerns about the economic outlook. In the European Central Bank’s (ECB) March projections, household consumption was expected to grow by 1.4% in 2025, supported by rising real incomes and a gradual decline in household savings.
However, the opposite scenario may now be unfolding. With heightened uncertainty, consumers could ramp up their savings and postpone major purchases, leading to a potential drag on overall economic activity.
Broader Economic Impact: Investment and Exports at Risk
The impact of ongoing trade tensions isn’t limited to consumer behavior. Increased uncertainty is also likely to weigh on business investment, further weakening the growth outlook.
Additionally, newly imposed tariffs are expected to directly affect eurozone exports. Even under the best-case scenario—where U.S. import tariffs remain capped at 10%—GDP growth could be reduced by 0.1 percentage points in 2025.
Outlook: Stagnation Likely in Q2 and Q3
Taking all factors into account, analysts are now forecasting stagnant GDP growth in both the second and third quarters of 2025. For the full year, eurozone GDP is projected to grow just 0.5%, a figure far below earlier estimates.
Conclusion
With weakening consumer sentiment, rising trade tensions, and potential setbacks in both investment and exports, the eurozone’s path to recovery in 2025 now looks increasingly fragile. Unless sentiment improves and uncertainty eases, the bloc may struggle to gain meaningful economic momentum in the coming quarters.
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