The Sentix index, which measures financial analysts’ and institutional investors’ perceptions of Eurozone activity, has been negative for six months, its worst run since the outbreak of the pandemic
Energy crisis, rising prices of basic products in the shopping cart and increasingly expensive holidays. The surge in prices since the outbreak of the war in Ukraine – which translated into runaway inflation in Spain of 10.8% in July – is also beginning to weigh on investor confidence in the eurozone’s recovery.
This is reflected in the Sentix index released this Monday, which, despite improving to -25.2 points in August from -26.4 the previous month, was worse than the expected -24.7 points and already has risen negatively for six months, just since March , coinciding with the start of the war in Ukraine.
This is the worst run since 2020, when the indicator was negative for ten months (March to December) in the midst of the pandemic. And this poses a problem for the markets, as the index is closely monitored when it is translated into the sentiment of financial analysts and institutional investors (including insurance companies or large funds) about economic activity in the region, both in the current situation and in the future. your expectation for a period of six months.
Sentix experts, who surveyed more than 3,100 investors from 20 different countries, acknowledged the indicator’s improvement in August. But they warn that “this does not imply a reassessment of the economic situation.” In addition, they believe that the perception of a “predictable recession” is maintained.
The indicator consists of two sub-indices: that of the current situation, which remains negative at -16.3 points, and that of expectations (-33.8 points). And, according to the company’s experts, “both continue to paint a bleak picture of the economic situation in the eurozone.” “It’s no surprise that neither the weak consumer confidence nor the inflation or energy price fronts are providing lasting positive impetus,” they add.
At the moment, the survey indicates that consumer confidence is the most worrying of those polled, leading consumers to “become increasingly aware of the financial burden of high energy prices”. And they refer not only to families, but also to companies that ultimately pass on this cost increase to their products.
In this sense, they point to the possibility that the uncertainty that consumers experience will “continue and predictably even increase” in the coming months. “In the long run, this will have a negative feedback loop on the economy,” they emphasize.
The company is not alone in pointing to a cessation of consumption, the engine of the recovery, in the face of rising prices as the main risk to the economy, which could become more apparent in the autumn, when the summer holidays are over. . Last week, the OECD published a report assuring that the rise in consumer prices is “undermining” household incomes, with disposable income falling in the case of Spanish households of 4.1%, four times more than the OECD and G7. -average .
However, Sentix’s monthly report warns in particular about the situation in Germany, where the indicator fell to its lowest level in May 2020. “The economy remains firmly on its way to a recession,” experts say.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
