Citigroup Cuts Euro Zone Real GDP Growth Forecast to 0.8% in 2023

Citigroup lowered its 2023 economic growth forecast for the euro zone as the European Central Bank signaled further interest rate hikes, putting pressure on a high interest rate environment.
Citi economists now expect euro zone GDP growth of 0.8% in 2023, down 0.3 percentage points from their previous forecast.
Meanwhile, Morgan Stanley cut its GDP growth forecast for Germany, Europe’s largest economy, to 0.2% from 1.0%, following a downward revision to Germany’s first-quarter GDP figures.
However, Citi raised its real GDP growth forecast for Italy to 1.3% from 0.4% previously, citing the normalization of tourist inflows and contact-intensive activity, as well as the impact of fiscal stimulus.
“We still expect monetary tightening to trigger a (euro area) recession in the second half of 2024 and forecast real GDP growth of 0.9% in 2024,” Citi economists said in a note.