Europe’s Economic Growth Outlook: Pessimism Persists

A recent poll of chief economists reveals a pessimistic outlook for Europe’s economic growth this year. In fact, three-quarters of economists surveyed expect weak to very weak growth in the region, making it the most negative forecast compared to any other region.

The survey, conducted in November and December and released in conjunction with the World Economic Forum in Davos, highlights a significant geographic divide. Interestingly, 93% of economists anticipate moderate to strong growth in South Asia, while 86% hold similar expectations for East Asia.

In contrast to Asia, expectations for the United States have also fallen. Only 56% of economists foresee moderate to strong growth, a noticeable decline from 78% in a September poll. The concerning figures for Europe reveal that 77% of economists now anticipate weak to very weak growth, nearly doubling the previous estimate observed in September.

The grim economic forecast aligns with recent data from Germany’s Federal Statistical Office, which reported a 0.3% contraction in the country’s economy in 2023. This decline follows a positive growth of 1.8% in 2022. The statistical agency attributes these results to the impact of high prices and unfavorable financing conditions on Europe’s largest economy.

Interestingly, only 13% of economists anticipate high inflation rates in both the United States and Europe this year. However, China deviates from this trend, with 76% of economists expecting low or very low inflation in the country.

The chief economists surveyed by the World Economic Forum represent a diverse range of institutions, including banks, consulting firms, international agencies, and companies such as Microsoft and Google. Their cautious predictions suggest that European economies face significant challenges and uncertainties as we enter the new year.

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