Goldman Sachs, JPMorgan Predict Eurozone Slowdown – Finance Bitcoin News

Global investment banks Goldman Sachs and JPMorgan have predicted an impending recession in the euro area. “The risk to our forecast is skewed towards a sharper recession in the event of an even more severe disruption to gas flows, a renewed period of sovereign stress or a US recession,” the economists at Goldman Sachs said.

Goldman Sachs’ predictions

Two major global investment banks, Goldman Sachs and JPMorgan, released reports on Wednesday independently predicting an impending recession in the eurozone.

Goldman Sachs’ analysts, led by European chief economist Jari Stehn, expect a recession in the euro area in the second half of this year that will last until the end of the year. They also forecast a decline of 0.1% in the third and 0.2% in the fourth quarter, and expect growth to return in 2023.

“Looking across countries, we have Germany and Italy in clear recession in the second half of the year, while Spain and France continue to grow,” the Goldman Sachs economists said, elaborating:

The risk to our forecast is skewed towards a sharper recession in the event of an even more severe disruption to gas flows, a renewed period of sovereign stress or a US recession.

The economists highlighted some reasons for the decline, including a looming gas crisis and Italy’s political problems that could delay the payment of EU aid.

JPMorgan’s predictions

In a note published on Wednesday, JPMorgan warned that the eurozone will be in a mild recession early next year. The bank’s economists have cut their economic forecasts. They now forecast eurozone GDP growth of 0.5% this quarter, followed by a 0.5% decline in both the fourth quarter of this year and the first quarter of next year.

The JPMorgan analysts added:

We expect the ECB [European Central Bank] to deliver a further 50 basis points of increases by the end of the year.

The bank’s analysts have cut their previous forecast of 75 basis points in three instalments. They now expect 25 basis points in both September and October.

The two global investment banks’ recession forecasts on Tuesday follow a warning from the International Monetary Fund (IMF) that both Europe and the US will see almost no growth next year if Russia completely cuts off Europe’s gas supply and further reduces oil exports.

Meanwhile, the US economy contracted from April to June for the second quarter in a row. The Bureau of Economic Analysis reported on Thursday that the country’s GDP fell 0.9% at an annual pace for the period. However, President Joe Biden has repeatedly dismissed fears of a recession. In addition, Treasury Secretary Janet Yellen said Thursday that the US economy is in a state of transition, not recession.

What do you think of the predictions of Goldman Sachs and JPMorgan? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.