Citigroup cuts 2023 euro area real GDP growth forecast to 0.4% By Reuters

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© Reuters. FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren/File Photo/File Photo/File Photo

(Reuters) – Citigroup (NYSE:) downgraded its 2023 economic growth forecast for the euro area to 0.4%, and said it expected the region’s economy to shrink “gently” over the next three quarters.

The Wall Street brokerage had earlier forecasted that the real gross domestic product (GDP) of the euro area, which includes Germany, France, Italy and Spain among others, to grow at 0.8%.

They also expect the economy to shrink by 0.1% in 2024, compared to 0.8% growth expected earlier.

Cyclical and structural headwinds to euro area growth are “too strong,” Citigroup economists, led by Christian Schulz, said in a note dated Thursday.

Schulz added that energy transition and labour shortages, China weakness, fiscal turn and monetary tightening “overpower” the real income gains of households.

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