Goldman Sachs has revised down its forecast for a Eurozone recession this year, from a 0.1% contraction in GDP.GS had anticipated a modest fall in Eurozone output of 0.1% this year. However, the bank now expects Eurozone economic growth to slow down throughout the winter months as a consequence of the energy crisis. Moreover, we no longer foresee a technical recession. We believe that Eurozone economic growth will be weak throughout the winter season due to the rising cost of labour. Moreover, core inflation is predicted to reach 3.3% in 2013. In addition, the ECB plans to increase interest rates by a total of 25 basis points in February and March. Finally, GS anticipates ‘sticky’ inflation and believes that prices will stay high.
