ENERGY COSTS TO EAT INTO BOTTOM LINE
- Stubbornly high inflation and anticipated increase in energy costs is expected to weaken profits in the private consumption sector
- Already weak economic growth expected to decline further
- However, expectation for the financial sector are improving due to supposed increase in short-term interest rates. The ECB is all but certain to raise rates in September.
The ZEW figure for Germany is watched closely by market participants (traders, analysts etc) given the country’s economic importance to the entire euro zone. The July figure printed lower than the lowest point in 2020 – signaling a bleak economic outlook over the next 6 months.
