As the COVID-19 recovery fades and higher rates start to dampen demand, eurozone economic activity may contract around the turn of the year, but we don’t expect unemployment to rise sharply. The medium-term outlook is brighter due to fiscal stimulus and a more supportive monetary policy. Although disinflation has started, the European Central Bank (ECB) continues to have core inflation worries and is likely to raise rates once more in July. We don’t expect the central bank to achieve its price stability target before 2025. Monetary policy should move away from restraining demand within the next two years. European banks will continue to issue significant amounts of wholesale debt in 2023 and 2024, with a further increase in covered bonds issuance as they seek to optimize funding costs. New markets and sustainable issuance will support further growth.