According to the American investment bank Goldman Sachs, the Eurozone will not enter a recession this year. Instead, the bank expects economic growth of 0.6 percent, thanks to a significantly lower gas price and the reopening of Chinese borders.
“Economic growth will remain quite low in the winter months due to the energy crisis,” Goldman Sachs economist Sven Jari Stehn told Reuters news agency. ‘However, we assume there will be no further recession.’
The growth forecast contrasts with the bank’s forecast in November, when it estimated that economic growth in the euro area would contract by 0.1%. Goldman Sachs now assumes an inflation rate of 3.25% at the end of 2023, up from 4.5% previously.
Basic inflation
Core inflation is also likely to fall to 3.3% by the end of 2023 as commodity prices fall. However, upward pressure on services inflation is still expected due to rising labor costs.
According to Goldman Sachs, due to the “sticky nature” of inflation, the ECB will make two more 50 basis point rate hikes in February and March, before making a further 25 basis point hike in April to reach a rate of 3 .5 basis points 25 points due out in May.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
