Strategic Alternatives 2025 Outlook: Europe’s economies brace for more political upheaval
Dec 20, 2024
Peter Schaffrik, Chief European Macro Strategist at RBC Capital Markets, breaks down Europe's economic landscape as it gears up for 2025. He discusses how recession seems avoidable yet growth remains elusive amid political instability. Schaffrik highlights the evolving role of central banks in a shifting interest rate environment and the complexities of fiscal policies impacting trade. He also examines opportunities for investors navigating uncertainties, including inflation and geopolitical tensions.
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European Growth Outlook
- Europe's 2025 growth outlook is cautiously optimistic, with a predicted 1-1.5% GDP increase.
- Factors include a firm labor market, lowered inflation, and central bank rate cuts.
Consumption and Savings
- Despite real wage growth and increased disposable income, consumption hasn't risen as expected.
- Savings rates increased, potentially hindering economic growth.
Inflation and Productivity
- While inflation is down overall, core services inflation remains sticky in both the UK and Euro Area.
- Low productivity growth further complicates the central banks' task of managing inflation.