S&P Global Ratings expects Eurozone GDP to grow by 0.7% this year, up from its previous forecast of 0.8%.
Most of this revision comes from a weaker carryover effect of 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&P Global 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 growth rebound is weaker than expected".
S&P Global Ratings also highlights that higher inflation over the medium term will mean the ECB will have less room 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," the S&P report concludes.
Reproduction reserved © Copyright ANSA