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Key questions for the Eurozone economy for 2025 By Investing.com



Investing.com – The Eurozone economy faces a tough balancing act in 2025, with growth expected to stabilize but with more uncertainty ahead, according to UBS.

Bank analysts believe that important questions for the region’s economy are related to consumer spending, inflation, foreign trade risks, and the impact of political changes.

They explain that the main focus is whether the consumer recovery will gain strength.

UBS expects “growth this year to be closer to 0.9%” as “household consumption” continues to pick up, fueled by strong wage growth and falling interest rates.

As the most important driver of economic activity in the region, UBS says that the recovery of consumer spending can lay the foundation for sustainable expansion, despite problems in other areas of the economy.

However, they add that the prospect of a renewed trade conflict with the US, especially under President-elect Trump, remains a major concern.

UBS warns that tariffs, especially on EU goods, could damage the economy, although analysts suggest that the effect may be there.

The level of “specific charges” targeting certain sectors could lead to a small GDP loss of 0.2-0.5%, according to the bank. However, UBS does not foresee these risks causing the Eurozone to decline.

On the monetary policy front, the European Central Bank (ECB) is expected to continue to cut rates, potentially lowering the deposit rate to 2%. Although the price pressures have decreased, UBS said that the risk of further economic problems could cause further declines, although the risks of this view are considered “balanced.”

On the political front, upcoming elections in Germany and continued uncertainty in France could create more uncertainty.

UBS suggests that a change in German leadership could bring “a firmer approach to economic policy.” Meanwhile, the ongoing war in Ukraine is also a wild game, with any shift towards peace likely to raise concerns in Europe.





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