Eurozone Investor Confidence Signals Economic Downturn: Sentix

Eurozone investor sentiment weakened in August reinforcing the fears of economic downturn as Germany burdens the entire zone with a deep recession, survey data from the behavioral research institute Sentix showed Monday.

The Sentix investor confidence index fell to -21.5 in September from -18.9 in August. The score was forecast to ease to -19.6.

At -22.0, the current situation index declined from -20.5 in the previous month. The score was the lowest since November 2022.

The expectations index posted -21.0 in September, which was weaker than the prior month’s -17.3.

The think tank said the German economy is burdening the entire currency zone with a deep recession. This has complicated the problem of the European Central Bank.

The dynamics of the economy justify a looser monetary policy, but in Germany, of all places, inflation is proving to be particularly stubborn, Sentix said.

The survey showed that Germany remained in recession. The investor confidence index in the biggest euro area economy hit -33.1, the lowest since October 2022, from -30.7 in August.

“The situation in Germany remains particularly precarious,” Sentix said. “Germany is also weighing heavily on the economy in the euro zone as a whole.”

Sentix said the lack of economic competence in the political leadership together with the enormous uncertainties for the economy caused by the energy and electricity crisis are dragging the largest euro area economy deeper and deeper into recession.

The current situation index slid to -38.3 in September from -35.3 a month ago. Likewise, the expectations index registered -27.8, down from -26.0 in August.

However, the Sentix survey suggested that investors were somewhat relaxed about inflation. They see an end to the upward trend in prices, thus providing the opportunity for the ECB to hike the interest rate.

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