Eurozone companies have seen their performance momentum slow further, but overall economic growth is likely to remain positive as expansion in services offsets the manufacturing downturn, the European Central Bank (ECB) said. ) was discovered through a survey.
The ECB on Thursday raised interest rates for the third time this year in hopes of preventing further economic decline, although Germany, its biggest economy, could slip into recession and the eurozone economy is barely growing. has been lowered by 0.25%.
The deteriorating mood among the 95 large non-financial companies surveyed reflects growing concerns about competitiveness, uncertainty about the green transition, high costs and concerns about political developments.
“This has forced companies to reduce investment and focus on cost cutting, weighing on consumer confidence,” the ECB said in a survey conducted between September 16 and September 26. said.
“Overall economic activity tended to be weaker than previously expected, mainly in Germany and France, but was generally more resilient elsewhere,” the ECB added. All of this could lead to a further slowdown in price growth and strengthen the case for the ECB to cut interest rates quickly, the companies said.
The ECB added that the automotive sector is the weakest, with overall demand weaker and demand for battery electric vehicles also falling, which has a knock-on effect across manufacturing.
The ECB said: “Stakeholders have pointed to a deterioration in the global economic and political environment, most notably the slowdown in China's economy due to a decline in export demand and intensification of import competition, and the decline in self-sufficiency. It includes an increase.”
Businesses said they do not expect the overall weak growth environment to change significantly in the short term, and employment expectations are muted as they focus on improving efficiency and productivity.
Thursday's interest rate cut comes as inflation continues to fall across the eurozone to 1.7%. Another ECB study, this time from professional forecasters, says inflation is expected to return to the 2% target sooner than expected and could remain around this level in the long run. Highly sexual.
Economists surveyed said they expected inflation to be 1.9% next year, lower than the 2% expected three months ago, and to remain at 1.9% in 2026.
This is slightly earlier than the ECB's own forecast, which calls for inflation to return to target only in the final quarter of 2025, averaging 2.3% annually. In the long term, defined as 2029, inflation is expected to be 2.0%, meeting the ECB's target.
Underlying inflation forecasts, which are a major concern for policymakers due to the rapid rise in prices of services, remained unchanged at 2.2% in 2025 and 2.0% in 2026.
