S&P Global projects eurozone GDP growth of 0.8% in 2024, 1.2% in 2025

Due to a more pronounced drop in energy prices, it expects inflation will be marginally lower in 2025, at 2.4 per cent, than 2.5 per cent anticipated earlier.

A long period of very stable macroeconomic forecasts might come to an end as new leaders in the United States, the European Union (EU) and Germany could take decisions early next year on tariffs, defense and general spending that could reshape the economic outlook of the zone, S&P Global said in a release.

Yet the underlying price trend remains intact, with prices potentially stabilising over the near term.

It anticipates the European Central Bank (ECB) will cut rates more quickly than it had previously expected due to persistently weak confidence and better visibility on the disinflation trajectory. It does not expect that the extent of the rate cuts will exceed its previous forecast.

It now projects that the main policy rate will reach 2.5 per cent before the summer of 2025, compared with its previous expectation of September 2025.

Market expectations regarding the development of the US economic policy imply a slight steepening of the euro yield curve.

As a stronger dollar and higher US yields would possibly attract more capital from Europe, S&P Global Ratings revised upward its working assumptions on German bond yields by 20 basis points to an average of 2.4 per cent in 2025. The increase in government bond yields is reflected across the eurozone.

Total employment increased by 0.2 per cent in third quarter (Q3) this year for the 14th consecutive quarter, while the unemployment rate in the eurozone has reached a new multi-decade low of 6.3 per cent in September.

Eurozone GDP increased by 0.4 per cent in Q3 2024, largely spurred by household spending.

Fibre2Fashion News Desk (DS)