Investor confidence in Eurozone continues to wane, as evidenced by the latest Sentix Investor Confidence Index, which fell from -18.9 in August to -21.5 in September. This drop was steeper than the anticipated decline to -19.6. Further analysis shows that the Current Situation Index dropped to -22.0, marking its lowest point since November 2022 and solidifying the view that Eurozone economy remains in a state of recession. Expectations Index also retreated, moving from -17.3 to -21.0.
The downturn was even more pronounced in Germany, Eurozone’s largest economy. The country’s Overall Investor Confidence Index fell for the fifth consecutive month, hitting -33.1, its lowest point since October 2022. This decline was accompanied by a drop in Current Situation Index to -38.3, the lowest reading since July 2020. Expectations Index in Germany also slipped from -26.0 to -27.8.
Sentix pointed out that Germany is the “center of gravity of the problems,” presenting a significant challenge for ECB. According to Sentix, Germany’s ongoing economic slump is burdening the entire Eurozone with a deep recession.
“This poses a double problem for the ECB. The dynamics of the economy would actually justify a looser monetary policy, but in Germany, of all places, inflation is proving to be particularly stubborn,” Sentix added.
