Analysts at Goldman Sachs opine the euro zone will grow at a faster clip than the U.S. economy in the next two years, which they attribute to a difference in government policy.
The investment bank expects the 19-member euro region to grow at a pace of 4.4% this year, compared to a rate of 3.5% for the United States. Looking at 2023, Goldman foresees the euro zone growing by 2.5% and the U.S. by 2.2%.
Sven Jari Stehn, Goldman’s chief European economist, said that while in the near term the picture in Europe is "challenging," the region still "has more room to grow."
“The hit is more manageable than last year,” he said, regarding the impact of recent COVID-19 restrictions on the euro zone economy.
European countries have not yet embarked on widespread lockdown rules despite the new omicron variant discovered in late 2021. This has prevented any deeper economic shocks in the first few weeks of 2022.
In addition, European fiscal policy is likely to remain accommodative this year, in contrast to what some economists predict for the United States, Stehn said.
Euro zone governments are expected to invest large sums of money in the coming years, after agreeing in 2020 to tap the markets in search for 750 billion euros ($849 billion U.S.). The disbursements of these funds to a large number of EU nations began in late 2021 and will continue to be released throughout 2022, if key reforms are implemented.
However, across the Atlantic, there are doubts whether U.S. President Joe Biden’s "Build Back Better" will become a reality. The legislation could mean an investment of $1.8 trillion, but differences among lawmakers may endanger the whole plan.
