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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Quick takeaways
- Europe's economy in 2025 may avoid recession with modest growth due to a resilient labor market and supportive rate cuts.
- Geopolitical tensions and persistent inflation challenges complicate fiscal policy responses, necessitating careful strategic measures for economic stability.
Deep dives
Europe's Economic Growth Forecast for 2025
The growth outlook for Europe in 2025 is generally cautiously optimistic, with expectations of positive growth around one to one and a half percent. This nuanced forecast arises from a surprisingly resilient labor market, which has continued to perform better than anticipated despite previous interest rate hikes. Even with inflation decreasing, signs point toward a stable economic environment that may avoid a severe recession. Central banks appear poised to support this positive trajectory by implementing rate cuts, which could further bolster economic activity.
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