Recovery in caution

According to a survey conducted by consulting firm Sentix on 1,267 investors, the investor confidence index for the Eurozone increased by 2.4 points, the highest level since April 2023.

Similarly, the outlook index rose to minus 2.3 points from minus 5.5 points in February, the sixth consecutive increase and the highest level since February 2022. The Eurozone current situation index also rose to minus 18.5 points from minus 20 points last month. The Eurozone economy has shown signs of recovery since the beginning of the year. The Hamburg Merchants Bank (HCOB) Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 47.9 in January - the highest level since July 2023.

Previously, the recovery picture was clouded by the stagnation of the German economy. Going against the general trend, the German outlook index fell to minus 27.9 points due to “a persistent economic downturn”. The current situation index even dropped to minus 40.5 points – the lowest level since July 2020. After a period of stagnation in the spring and summer of last year, the German economy contracted by 0.3% by the end of 2023 due to falling investment. The German Federal Government forecasts the country’s economy to grow by just 0.2% in 2024. Federal Economics Minister Robert Habeck recently admitted that the German economy is emerging from the crisis more slowly than expected.

With both input and output prices in the services sector rising, the ECB is not ready to ease monetary policy, according to Cyrus de la Rubia, chief economist at HCOB. At the end of January, the ECB kept interest rates at a record high of 4% and reaffirmed its commitment to fighting inflation. This is the third consecutive time the ECB has kept interest rates unchanged after a long period of raising interest rates to curb price increases. Experts say the Eurozone should still be cautious. Sentix CEO Manfred Hübner said the recovery is not a typical spring recovery because the growth momentum is relatively weak, based on very weak indicators at the end of 2022.

VIET LE

Source