Eurozone Sentix Investor Confidence Signals Stabilization

Eurozone investor confidence rose marginally in May suggesting the beginning of a stabilization phase after undergoing a breath-taking crash due to coronavirus, covid-19 pandemic, survey data from the behavioral research firm Sentix showed Monday.

The headline Sentix investor confidence index rose to -41.8 in May from -42.9 in the previous month. Nonetheless, this was weaker than economists’ forecast of -33.5.

The collapse caused by the administrative measures to halt the spread of virus went far beyond the distortions led by the financial crisis.

Assessment of the current situation deteriorated to a record low but light at the end of the tunnel was shown by an increase in the expectation values, Sentix said.

The current situation index declined to a record low 73.0 from -66.0 in April. Meanwhile, the expectations index rose to -3.0 from -15.8 a month ago.

“We are at the beginning of a stabilisation phase, which is already clearly visible in Germany and especially Austria,” Sentix said.

Germany’s investor confidence index improved to -35.3 in May from -36.0 in the previous month.

Sentix noted that there is now a danger that recessionary tendencies will become entrenched if the economy is too slow to recover.

Elsewhere, the survey of Professional Forecasters from the European Central Bank said the expected effects of the coronavirus, or covid-19, pandemic and subsequent mitigation measures have a significant impact on inflation, growth and unemployment rate forecasts.

Real GDP growth expectation for current year was revised down significantly. The currency bloc is forecast to shrink 5.5 percent this year instead of 1.1 percent growth estimated previously.

However, the projection for 2021 was revised up to 4.3 percent from 1.2 percent.
Inflation is forecast to slow to 0.4 percent in 2020 before rising to 1.2 percent in 2021. The estimate for 2020 was revised from 1.2 percent and that for 2021 from 1.4 percent.

For 2022, inflation is seen at 1.4 percent and economic growth at 1.7 percent.

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