Goldman Sachs no longer expects a recession in Europe
According to analysts at the giant US bank, the economy of the euro area proved much more resilient at the end of 2022 than expected. Gas prices have also been falling sharply and China also lifted its rigorous coronavirus restrictions, meaning the economic outlook has improved significantly.
In an analysis for clients, the bank's analysts say the Eurozone economy could grow by 0.6% this year, compared with a 0.1% contraction previously expected. They do note, however, that growth is expected to be weak in the winter. They also expect
INFLATION TO FALL SHARPLY TO 3.25% BY THE END OF THE YEAR.
The economists also note that attention should now be paid to the decline in core inflation: the rise in the price of goods may slow, while the price of services may continue to rise significantly due to higher labour costs.
The resilient economy, stubborn core inflation and central bank commentary suggest that the European Central Bank (ECB) could maintain its resolute tightening policy. According to Goldman, there could be a 50 basis point hike at the next two meetings, followed by a quarter of a percentage point hike in May.
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