"We think we could see more robust GDP prints in H1 2023
but some weakening afterwards, as the negative impact of the
restrictive monetary policy gains momentum in the euro area, and
the outlook for the U.S. economy is also more negative than
previously thought," MS economists led by Jens Eisenschmidt said
in a note.
They expect the ECB to deliver three more hikes this year as it battles inflation, which
at 6.9% as of March is still above the central bank's 2% target. The ECB has hiked by 350 basis points in its current hiking cycle.
The euro zone narrowly avoided a technical recession at the end of last year, registering
no growth
quarter-on-quarter in the final three months of 2022, data
showed earlier in March.
HSBC also recently raised its euro zone GDP forecast, expecting a 0.6% rise, while
Goldman
Sachs sees 0.7% growth. Goldman's forecast factors in a
0.3% hit from the ongoing stress in the global banking system.
(Reporting by Subhadeep Chakravarty; Editing by Krishna Chandra
Eluri and Maju Samuel)
