Eurozone 2024: Soft Landing, Modest Growth, and East-West Investment Shifts

In the 2024 eurozone economic outlook by S&P Global, a 'soft landing' is expected in the first quarter, driven by rising real incomes from disinflation and robust wage growth, bolstering consumer spending. Inflation in the eurozone is projected to be around 2.9% in 2024, while wage growth is expected to decrease to about 4%, down from 5% in 2023. The eurozone's private sector shows a strong balance sheet, with a net financing capacity of 4.5% of GDP, providing a safety net for economic recovery. Growth is expected at about 0.8% in 2024, slightly down from earlier predictions and contingent on the European Central Bank cutting interest rates following a reduction in inflation. Risks to this outlook include European politics, geopolitical events, labor market challenges, and rising labor costs. Eastern European economies, which have been harder hit by inflation, are likely to attract significant Western investments due to the disparity in labor costs with Western Europe.

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