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The Eurozone is bracing for a strenuous 2025 as economists highlight mounting risks from a potential global trade war and regional political instability. A Financial Times poll of 72 economists identifies these factors as the most significant threats to the region’s economic health, with consensus forecasts projecting a mere 1.1% growth for the year. US President-elect Donald Trump’s promise to impose tariffs of up to 20% on US imports, with a potential escalation to 60% on Chinese goods, has raised fears of heightened protectionism. If enacted, these measures would represent the most significant increase in US tariffs since the Great Depression, likely triggering retaliatory actions from affected countries. The Eurozone, which maintains a significant trade surplus with the US, faces heightened exposure to these tariffs. Economists also warn of potential disruptions from China, which might flood global markets with cheap goods in response to Trump’s policies. Trade wars loom large: Should the Eurozone brace for impact? Nearly 69% of FT poll respondents anticipate a US-EU trade conflict, while 81% expect Trump’s return to weigh heavily on Eurozone growth. “Trump’s second presidency is now the single biggest political and economic risk,” said Mujtaba Rahman, managing director for Europe at Eurasia Group.  FT Poll on 2025 Economic Trade Wars Possibility. Source: Financial Times Economists expect the Eurozone to expand by just 0.9% in 2025, marking a third consecutive year of below-average growth. This outlook aligns with a recent European Central Bank (ECB) survey of independent economists, which showcased several downside risks.  The mere anticipation of tariffs will likely prompt businesses to delay investments as fear of the “unknown” creeps into business sectors. John Llewellyn, a former senior economist at the OECD, predicted an even gloomier scenario, suggesting the Eurozone economy could shrink by 1% over the year. “Economic stability is far more…

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Filed under: News - @ December 31, 2024 8:23 am