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Goldman Sachs is anticipating a significant economic resurgence in the euro area, with expectations of a growth rate ranging between 1.25% and 1.5% in 2024. This projection represents more than a doubling of their growth estimate for the region for the current year, which stands at approximately 0.5%.
In contrast, the brokerage’s forecast for the euro area in 2023 falls significantly short of their 2.2% growth prediction for the United States.
Goldman Sachs attributes this anticipated growth in the euro area to a cyclical re-convergence with the United States. They anticipate that various challenges faced by the euro area, including the drag effect of energy prices and credit constraints, will gradually diminish.
It is noteworthy that Goldman Sachs’ 2024 growth forecast for the euro area stands in stark contrast to HSBC’s expectation of a 0.5% growth rate for the region during the same period.
However, Goldman Sachs does acknowledge potential risks associated with fiscal policy. They highlight fiscal policy as the primary concern that could jeopardize Europe’s growth catch-up in 2024. Rising long-term interest rates and a slowdown in nominal growth raise concerns that a more substantial fiscal adjustment may be necessary, particularly in countries like Italy.
