Eurozone Economy Nears 1% Growth Amid Rate-Cut Expectations
Capital Economics projects that the Eurozone economy will grow by approximately 1% over the next two years, with Spain outperforming Germany, France, and Italy.
The firm also anticipates inflation rising to around 4% early next year before gradually easing to a level consistent with the European Central Bank’s 2% target by the end of 2027.
Capital Economics expects the European Central Bank to halt monetary policy tightening following a rate hike in December, with a likely return to rate cuts in the second half of next year and rates falling below current levels by 2028. Conversely, yield spreads on French and Italian bonds may widen due to elections and fiscal risks.
