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The Goldman Sachs analysts remain optimistic on the Euro area economic growth outlook, in light of the improving coronavirus situation in the bloc and on the recovery fund hopes.

Key quotes

“New infection numbers remain low – the spike in confirmed cases in Germany last month has proven temporary.

High-frequency economic indicators are showing a robust rebound.

After hesitating initially, the policy has also turned very supportive. Although we expect the EUR750bn Recovery Fund to shrink slightly to EUR600bn before implementation, it is coming alongside aggressive ECB asset purchases that should suffice to close the sizable “funding gap” of its Southern Member States. 

We therefore remain comfortable with our far above-consensus forecast that Euro area real GDP will grow nearly 25% over the next two years (in cumulative terms).”