With US trade policy uncertain and global demand declining, the ECB views growing trade frictions and regulatory hurdles as threats to eurozone growth. Despite the fact that inflation is declining, authorities are still cautious and have not committed to lowering interest rates.
As concern over US trade policy and global demand begins to increase, the European Central Bank (ECB) has cautioned that growing trade frictions and regulatory barriers may hinder growth in the euro region. The ECB said in its most recent Economic Bulletin, which was released on Thursday, that although robust US imports temporarily supported global trade, the momentum for global trade slowed at the end of 2024.
With its nowcasting models projecting an average growth rate of 0.7% for the fourth quarter of 2024 and the first quarter of 2025, the ECB observed that global trade growth slowed in late 2024. This declined from the 1.5% average for the preceding two quarters. However, towards the end of the year, US imports were still high, which helped European exporters somewhat.
The European Central Bank (ECB) admitted that companies may have frontloaded goods in anticipation of possible new taxes or trade barriers due to uncertainties about trade policies under the new US administration. Greater friction in global trade could weigh on euro area growth by dampening exports and weakening the global economy” the European Central Bank stated.
Also Read:
