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| Eurozone companies face increased competition from China |
| Frankfurt am Main, 25.07.2025 |
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| Companies in the eurozone are facing a slowdown in economic growth and increased competition from Chinese companies, a survey by the European Central Bank (ECB) showed. The tariffs imposed by the United States are weakening confidence and forcing competitors to look for new markets. TASR reports this based on a report by the Reuters agency.
The ECB left its monetary policy stance unchanged on Thursday and presented a slightly optimistic assessment of the eurozone economy, which raised doubts among investors about further rate cuts, and the threat of tariffs from the United States also poses a risk to the economic outlook.
The survey, conducted by the ECB between June 23 and July 2 among 72 large companies operating in the eurozone, showed a slowdown in both the manufacturing and services sectors, which dampened the outlook for employment and prices.
According to the ECB, companies “reported a slowdown in activity in recent months, as tariffs, geopolitical tensions and the resulting uncertainty have weakened business and consumer confidence.” The feedback signals very modest economic growth in both the second and third quarters.
Companies see the US tariffs, the level of which is currently under negotiation, as a negative factor for growth and said that competition from Chinese goods is playing an “increasing role.” Reduced demand, partly caused by the redirection of goods from Asia (and especially China) as exporters from the region sought alternatives to the US market, has had a negative impact on activity and prices.
So far, these factors have mainly affected semi-finished goods and have had only “a small or negligible impact on final consumer prices,” but this may change in the coming months and quarters.
Companies expect wage growth to slow to 3.3% this year and 2.8% in 2026 from 4.5% last year.
ECB expects lower inflation this year and next, long-term expected at 2%
Inflation in the euro area will likely be lower this year and next than initially expected, and in the long term should stay close to the European Central Bank's (ECB) inflation target. This was pointed out on Friday by the results of the ECB's quarterly survey, the so-called Survey of Professional Forecasters (SPF). TASR reports on this based on a report by Reuters.
The inflation rate has slowed significantly in recent years and is currently at 2%. That is the level of the ECB's inflation target. Therefore, the bank left interest rates unchanged at its last meeting on Thursday, July 24. It also stated that it would not rush to make further cuts in the coming period after having lowered the deposit rate from 4% to 2% from June 2024.
Now, based on a survey of professional forecasters, the ECB expects inflation to average 2% this year. Three months ago, the SPF set an estimate of 2.2%. Next year, the inflation rate should ease to 1.8%, while the SPF originally stated 2%.
However, according to forecasters, the drop below the inflation target should only be short-lived and consumer price growth will subsequently return to 2%. Inflation should then remain at this level in the long term, defined as 2030.
According to forecasters, economic growth should be somewhat stronger this year than originally expected. The original survey had expected growth of 0.9%, but the survey now estimates growth at 1.1%. Trade disputes and tensions over US tariffs were expected to hit the economy harder, but it has proven to be more resilient than expected.
The ECB has kept its unemployment forecast largely unchanged. The survey forecasters still expect unemployment in the euro area to be at 6.3%, with a slight decline to 6.2% in the longer term.odkaz na stránku |
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Address : Euro-Brew Ltd., Hlboká 22, 917 01 Trnava, Slovakia
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