Goldman Sachs stated on Tuesday that it predicts the euro zone economy to expand by 0.6% this year. Up from its previous projection of a contraction. Due to lower natural gas costs and also the reopening of China’s borders.
In a report, Goldman Sachs economists under the direction of Sven Jari Stehn stated, “We no longer think for a technical recession however we maintain our assessment that Euro area GDP will be poor all through the wintertime given the energy crisis.”
The Wall Street bank had predicted a 0.1% decrease for the country in Nov. A technical recession is often describe by two consecutive quarters of dropping GDP (GDP).
According to the economists. The inflation rate in the euro zone would be near 3.25% at the end of 2023 as contrast to the 4.50% forecasted earlier.
According to Eurostat figures released this week. The euro zone’s overall consumer price rise in December decreased as 9.2% against 10.1% a month ago.
As commodity prices drop, core inflation for the country is also predicte to fall to 3.3% by year’s end.
But ongoing upward impact on services inflation is anticipat due to rising cost of labor, As per Goldman Sach.
Goldman anticipates the European Central Bank to maintain its hawkish stance and deliver 50 bps increases in Feb and Mar before easing to 25 bps for a final rate of 3.25% on May. This is due to the “sticky” aspect of inflation.
Goldman forecasts a 0.7% drop in GDP in the United Kingdom, down from a 1% contraction previously forecasted. Due to decreased wholesale natural gas costs.
The U.S. bank anticipates another 100 basis points increase by the Bank of England even as UK labour market stays heated.