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The growth gap between Europe and the United States will narrow in 2025

A timid but welcome revival of optimism.

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The growth gap between Europe and the United States will narrow in 2025

A timid but welcome revival of optimism. In its updated economic forecasts published Thursday, the OECD expects European growth to be 0.7% in 2024, compared to 0.6% previously in February. “Weak” growth, comments the international institution based in Paris, before rising to 1.5% in 2025, “thanks to the recovery in domestic demand”. Consumption should be boosted by an increase in wages in tight labor markets and by the fall in inflation which will stimulate the purchasing power of households.

For the moment, the euro zone has been mired in stagnation for a year and a half and came close to recession in the first quarter. Faced with this sluggish growth, the European Central Bank (ECB) should, as expected, begin its cycle of interest rate cuts in June. Heavyweight in the region, Germany should only see its economic activity increase by 0.2% this year, says the OECD, which in February was still counting on 0.3%. Growth in Great Britain was also revised downwards, to 0.4% from 0.7%. Conversely, France saw its forecast slightly raised to 0.7% compared to 0.6% previously announced. The information did not escape the Minister of the Economy, Bruno Le Maire, who was quick to comment on it this Thursday on BFMTV. “France is in the right direction,” he assures, before pointing out “the permanent pessimism” of some.

The fact remains that European activity still pales in comparison to the United States. US growth is forecast at 2.6% this year. The strength is such that the much-hoped-for cut in interest rates from the Fed (American central bank) could be delayed, as inflation has started to rise again.

These divergent destinies can be explained by the energy shock of the war in Ukraine, the level of savings and the distinct budgetary policies – more expansive across the Atlantic. This gap between the two regions will narrow, predicts the OECD “as the recovery in Europe strengthens and growth slows in the United States.”

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