BERLIN- Investor morale in the euro zone was essentially unchanged in August from the previous month, with a slight rise too little to stave off fears of recession in the 19-country currency bloc, a survey showed on Monday.
Sentix’s index for the euro zone inched up to -25.2 points from -26.4 in July. A Reuters poll had pointed to an August reading of -24.7.
“The economic situation in the euro zone remains difficult,” Sentix Managing Director Manfred Huebner said in a statement, adding the slight rise did not signal the all-clear.
“A recession in the euro zone is still very likely,” he said, citing weak consumer confidence, inflation and energy prices.
A Sentix index on the current situation in the euro zone was up very slightly at -16.3 in August after falling to -16.5 in the previous month, which was its lowest since March 2021.
An expectations index rose to -33.8, still close to its July level that was the lowest since December 2008.
The situation in Germany, Europe’s biggest economy, looked even worse with the overall index dropping to -24.4 points, the lowest level since May 2020.
The poll of 1,262 investors was conducted between Aug. 4 and 6, said Sentix.
The euro zone economy grew much faster than expected in the second quarter, but economists said it might be the economy’s last hurrah before ever-higher inflation and supply chain problems cause a mild recession in the second half of the year.
The stronger growth came despite stagnation in the bloc’s biggest economy Germany, where high inflation and fears of a gas crisis triggered by the war in Ukraine have caused consumer and business sentiment to plummet, economists said.
The EU’s statistics office said euro zone gross domestic product rose 0.7 percent quarter-on-quarter in the April-June period for a 4.0 percent year-on-year gain, strongly beating expectations of a 0.2 percent quarterly and 3.4 percent annual gain.
Meanwhile, inflation rose to another record high in July and its peak could still be months away, keeping pressure on the European Central Bank to opt for another big interest rate increase in September.
Consumer price growth in the 19 countries sharing the euro currency accelerated to 8.9 percent in July from 8.6 percent a month earlier, far above expectations for 8.6 percent and well clear of the ECB’s 2 percent target, Eurostat said.
