The Eurozone economy should escape a recession this year

In this period of high uncertainty, it can be hard to gauge the true health of the Eurozone economy and whether a downturn is imminent or not. To assess the odds of a slump and inform our forecasts, we have revamped our forward-looking recession risk indicators. Our updated measures, which outperform the predictive power of our previous indicators, suggest the recession odds for the Eurozone are contained.

What you will learn:

• Among the big four, Germany displays the highest risk of a downturn, followed by France and Italy. Spain’s strong performance means its recession risks are close to nil.
• Germany’s industrial and export focus makes it the most vulnerable to tariffs, which worsens an already poor starting point. France’s domestic issues make it somewhat vulnerable, despite its structural resilience to global shocks.
• A prolonged standoff will keep trade policy uncertainty elevated, which could, over time, erode economic momentum and raise recession risks.