The economy and international banking have been hit hard in recent weeks, starting with the collapse of Silicon Valley Bank and extending across the Atlantic with the sale of Credit Suisse to rival UBS. And what are the predictions of experts?
In a research note accessed by the Executive Digest, Goldman Sachs sees a bleak scenario for the eurozone but acknowledges a stable and well-prepared regulatory structure.
“Continued banking stress is clouding the outlook for the Eurozone as bank stocks plummet and retail finance costs soar. Risks still appear contained. But they warn that turmoil in the banking sector will reduce bank lending and weigh on the outlook for the euro area.
“Our analysis, linking measures of bank lending to indicators of financial stress, suggests that lending standards will continue to tighten from here, with real GDP for the eurozone as a whole next year expected to be around 0.3%. It shows,” he said.
This means that if access to credit, mainly from businesses, is reduced or made more difficult, production costs will increase, affecting all parts of the chain, which could have a huge impact on the economy. To do.
However, Goldman Sachs said growth momentum remains strong amid looming financial turmoil, aided by lower gas prices, the opening of China’s markets and the government’s fiscal stimulus to combat inflation. is emphasized.
Due to high core inflation, Goldman Sachs continues to forecast high inflation in the coming months. “Sequential nuclear inflation could slow as lower energy prices cycle through underlying policies by the European Central Bank (ECB).
A Goldman Sachs expert said the ECB raised 50 basis points at its March meeting to fight inflation, but abandoned forward guidance in response to financial risks and adopted an entirely data-driven stance. ” I’m guessing.
“Thus, given the forecast of higher core inflation, we expect further rate hikes, but at a slower pace (25 basis points each in May and June),” May points. If bank tensions ease rapidly and the economy remains resilient.
Banking turmoil: IMF governor admits ‘risks to financial stability have increased’.