Goldman Sachs economists said that amid concerns about a more serious crisis brewing in the financial system, as well as increased economic uncertainty, the growth of the eurozone economy is likely to slow down significantly this year, and bank lending will decrease by about 10% (both in the eurozone and in the UK).
Now Goldman Sachs predicts that the real GDP of the eurozone will grow by 0.7% this year, which is weaker than the previous forecast (+1%), and represents a sharp slowdown compared to 2022. Last week, the ECB increased its projection for eurozone GDP growth this year to 1% from 0.5% due to falling energy prices and greater "resilience to the challenging international environment". ECB staff then expect growth to pick up further, to 1.6% in both 2024 and 2025, underpinned by a robust labor market, improving confidence and a recovery in real incomes.
As for the UK's economic prospects, Goldman Sachs now predicts economic stagnation in 2023. Meanwhile, economists said that the Bank of England is likely to complete its cycle of tightening monetary policy after the March meeting, during which Goldman Sachs predicts an interest rate increase by 0.25%, to 4.25%.