As far as inflation is concerned, revised estimates have lowered the inflation rate to 5.6 per cent for this year, while maintaining the projection at 2.7 per cent for 2024, as per the Economic Outlook Eurozone Q4 2023 report.
The report also highlights the critical role of the labour market in shaping the economic outlook for 2024. With inflation rates projected to continue moderating, increasing wages will likely improve real disposable income next year. This easing of income constraints is expected to boost consumption. However, a downturn in the labour market could tip the Eurozone into a recession.
On the trade front, the lacklustre performance of Eurozone exports over recent quarters does not indicate losses in global trade as of yet. However, due to rising energy prices, the trade surplus remains lower than it was before.
Regarding interest rates, the report suggests that the European Central Bank (ECB) may have reached a peak and doesn't anticipate any rate cuts before the second half of 2024. The ECB might also speed up the process of quantitative tightening (QT). While QT is expected to exert some upward pressure on bond yields, its full impact remains difficult to gauge at this moment.
Fibre2Fashion News Desk (DP)