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Apositive narrative about Europe‘s economic outlook is emerging for the first time
Apositive narrative about Europe‘s economic outlook is emerging for the first time in years, acknowledges Citigroup in its latest global economic review. However, the bank remains cautious in the short term, emphasizing that prudence is still necessary despite the improving outlook.
According to Citi, four key factors could enhance Europe’s growth prospects. Germany seems ready to ease its fiscal policy, which would help stimulate domestic demand.
The region is also gearing up for increased defense spending, while anticipated interest rate cuts by the European Central Bank should provide additional support.
Moreover, a negotiated resolution to the Russia-Ukraine conflict, if achieved, could significantly boost sentiment across the continent.
Yet, challenges remain. Among them are the recently announced U.S. tariffs, set to take effect on April 2. Citi believes that Germany’s bold fiscal shift is likely to bolster confidence in European assets and ultimately have a positive impact on Eurozone growth.
However, the bank urges caution in the near term, as public spending takes time to materialize, especially if Europe aims to reduce its reliance on military imports.
Additionally, higher yields could dampen private spending by tightening financial conditions. The lingering uncertainty stemming from geopolitical upheavals and the looming U.S. tariffs may
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