The European Commission’s economic sentiment indicator rose in January, indicating positive growth prospects for the Eurozone. Inflation expectations have eased but remain above long-term averages. The European Central Bank (ECB) is not expected to change its stance, although the weakening Dollar will be monitored closely. Peter Vanden Houte, Chief Economist at ING, provides insights into the Eurozone’s economic outlook.
Positive outlook for Eurozone growth
“Following a subdued December, the European Commission’s economic sentiment indicator increased to 98.2 in January from 97 previously. Among the big member states, France saw the most spectacular improvement, with its sentiment indicator rising sharply to 100.4 from 94.6 in December.”
“Confidence improved across all eurozone sectors except construction, where sentiment held steady. Notably, the manufacturing sector continues to recover, with production expectations surpassing their long-term average despite ongoing weakness in export orders.”
“However, the recent depreciation of the US dollar will be carefully observed. According to an alternative scenario presented by ECB staff in December, assuming a gradual depreciation of the dollar to 1.27 against the euro, eurozone inflation could reach 1.6% in 2027 and 1.7% in 2028.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/eurozone-economic-sentiment-indicator-rises-ing-202601291255
