Barclays no longer expects the U.S. economy to slip into a recession later this year and has revised up its growth forecasts, given signs of a de-escalation in U.S.-China trade tensions, the bank said in a note released late Thursday.

Barclays said it now expects the U.S. economy to grow 0.5% this year and 1.6% next year, up from previous forecasts of -0.3% and 1.5%, respectively.

Reduced uncertainty and an improved economic backdrop also led Barclays to lift its euro area growth expectations. It now forecasts flat economic growth this year, compared to a 0.2% contraction previously.

Barclays noted it still expects a technical euro zone recession in the second half of 2025, but with growth contracting by less than previously forecast.

"Overall, we remain downbeat about the growth outlook in the euro area because uncertainty remains very elevated and the negotiations on reciprocal tariffs between the European Union (EU) and the U.S. remain at a technical level and there are no signs of progress," Barclays said in a note.

Source: Reuters