Growth in the euro area, on the other hand, is currently very weak. Once again, private consumption is part of the explanation. Especially in Germany, households are reluctant to increase their consumption demand. More fundamentally, Germany has a clear need for structural reforms of its labour market and welfare system.
The reforms are being addressed, but as long as the changes are still ongoing and even more are expected, general uncertainty will prevail. This contributes to the caution towards increasing private consumption. Structural reforms are also needed elsewhere in the euro area. For the euro area overall, the weak development in consumption is a key factor behind the moderate growth.