Sentix, a research organization based in Frankfurt that conducts studies on the markets, has released the Eurozone General Investor Confidence Index data for July, based on the participation of 1,140 investors.
According to the report, the Eurozone General Investor Confidence Index fell to minus 7.3 this month from 0.3 in June, marking a decline of 7.6 points. This also signifies the end of the recovery trend seen in the index since October 2023.
The expectation for the index was that it would remain stable in July.
The Expectations Index, which measures investors’ outlook for the next six months, also showed a concerning drop, decreasing from 10 points to 1.5 points.
The Current Situation Index fell from minus 9 points to minus 15.8 points.
In its statement, Sentix noted, “The recent recovery of the European economy has abruptly come to an end,” adding, “The 8.5-point drop in expectations appears to worry forecasters, as it suggests that the already challenging economic situation may worsen over the next six months.”
The announcement mentioned that investors are concerned about uncertainties related to elections in France, upcoming regional elections in Germany, and the U.S. presidential elections at the end of the year. It stated, “Concerns are escalating as the health of the sitting U.S. president and the candidates opposing former president Donald Trump in the White House race remain unanswered. This uncertainty creates a sort of void, especially as the slowdown in the U.S. economy intensifies and begins to spread to other economies worldwide.”
EXPECTATIONS IN THE GERMAN ECONOMY IN THE NEGATIVE ZONE
In Germany, which has an export-oriented economy, the General Investor Confidence Index dropped to minus 19 points in July, a decrease of 6.5 points after three consecutive months of increases.
The Current Situation Index in Germany declined from minus 26.3 points to minus 32.3 points.
Patrick Hussy, the Managing Director of Sentix, commented, “Despite the positive atmosphere following the 2024 UEFA European Championship held in Germany, the German economy is experiencing another downturn.”
Hussy noted that the increase in investor expectations in June was “not particularly dynamic,” stating, “Now this promising trend is once again fully at risk. The Expectations Index fell below the results from April 2024, plunging to minus 4.8 points, returning to the negative zone. The expected boost from a successful European Championship is nowhere to be seen.”
After two years of stagnation, the German economy narrowly avoided technical recession by recording a 0.2% growth in the first quarter of the year.
The economy of the country remains fragile, especially due to the persistent weakness in the manufacturing sector, which plays a more significant role compared to other countries in the region.
Earlier, the German government had revised its official growth forecast for 2024 from the previously announced 0.2% to 0.3% on April 24, indicating “signs of slight cyclical improvement.”
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
