Looking forwards, according to the June 2016 Eurosystem staff macroeconomic projections for the euro area, annual real GDP is expected to increase by 1.6% this year and by 1.7% in the next two years. At the same time, inflation dynamics in the euro area remain rather subdued.
The rate of headline inflation was slightly negative in May and is expected to hover at low levels over the coming months. While lower oil prices continue to act as a drag on the annual headline inflation, domestic price pressures, notably from wage growth, also remain muted, reflecting persistent economic slack.