In the statement made by the international credit rating agency Standard & Poor’s (S&P), it was stated that the Euro Zone started to come out of the winter recession with disinflation, but inflation is not expected to return to the target level of 2 percent until 2025.
International credit rating agency Standard & Poor’s (S&P) reported that disinflation has started to pull the Eurozone out of the winter recession.
In the statement made by the credit rating agency, it was stated that although inflation is not expected to return to the central bank’s 2 percent target by 2025, disinflation should start to accelerate.
In the statement, it was stated that disinflation started to pull the Euro Zone out of the winter recession, and the growth forecast for the region’s economy was increased to 0.6 percent from 0.3 percent this year, with the strong labor market, the effects of fiscal measures and the possibility of further interest rate hikes.
In the statement, it was stated that the Euro Zone is expected to come out of stagflation in the second and third quarters thanks to the decrease in inflation and the first normal tourism season since Covid-19, however, it was stated that other post-pandemic headwinds decreased and high interest rates reduced demand.
“Even in the midst of a weakening economic cycle, we do not foresee a deep recession in the Eurozone,” the statement said.
High interest rates will restrict the growth of the UK economy.
On the other hand, in another statement made by S&P, it was stated that the increasing pressure caused by the tightening of monetary policy will further constrain growth in the UK economy.
High employment and strong wage growth have kept UK consumers relatively resilient to inflation pressures so far this year. At least some of this will continue, but little improvement is expected in 2023 due to high interest rates.
In the statement, it was stated that the Bank of England (BoE) is expected to loosen its restrictive policy again in the first half of next year, sooner than the markets currently expect, in order not to limit growth more than necessary.