Goldman Sachs cuts European growth forecasts amid Trump election concerns
Goldman Sachs has reduced its growth forecasts for Europe due to potential economic impacts from Donald Trump's return to the White House. The Eurozone growth estimate for 2025 is now 0.8%, down from 1.1%. The UK forecast has also been lowered from 1.6% to 1.4%.
The revised forecasts are based on expectations of limited tariffs, primarily targeting European auto exports. If broader tariffs were implemented, the growth impact could be more severe. Increased defense spending is expected to have a minimal effect on overall growth.
Goldman predicts a 0.5% reduction in real GDP for the Euro area, with Germany facing a 0.6% hit and Italy a 0.3% hit. The bank also anticipates small inflation effects and has adjusted its interest rate forecasts for European central banks.