S&P Global Ratings expects Eurozone GDP to grow by 0.7% this year, compared to its previous forecast of 0.8%.
Most of this revision derives from a weaker carry-over effect on 2023 GDP. The 2025 GDP growth forecast has been revised downwards to 1.3% from 1.5%.
The 2026 figure has been revised downwards, bringing it to 1.3% from 1.4%.
The European economy remains on track for "improving activity and moderating employment growth".
Thus Sylvain Broyer, chief economist of S&PGlobal Ratings for the EMEA area, in a report on the performance of the eurozone economy.
"However, uncertainty over productivity trends - he continues - and the slow implementation of the new generation EU recovery package could mean that the rebound in growth is weaker than expected".
S&P Global Ratings also highlights that higher inflation in the medium term will mean the ECB will have less headroom than expected to continue its rate-cutting cycle through 2025. The current deposit rate of 4.0% is expected to "fall to 2.5% by the end of 2025, compared to 2.0% in our previous forecast.
We have not changed our view that the ECB will cut rates three times in 2024, starting in June", concludes the S&P report.
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