Germany, France and Italy, the leading eurozone economies, appear on the brink of recession after business confidence surveys hit multi-year lows amid the global financial crisis, analysts said. The prevailing gloom in the three countries included signs that even worse might lie ahead, raising pressure on the European Central Bank (ECB) to lower its key interest rate, they added.
Business confidence in Germany, Europe's biggest economy, dropped for a fourth straight month in September to its lowest level since May 2005, economic research institute Ifo said on Sept. 24. Its general climate index fell to 92.9 points from 94.8 points in August, with the key manufacturing sector's six-month outlook the most gloomy since during the recession of 1992-93.
In France, business sentiment was at its lowest point since August 2003, while in Italy it plumbed depths last seen in October 2001, according to the ISAE institute there.
INSEE said French industrial production "will continue to slow in the coming months." In Belgium, seen by many economists as a bellwether of the eurozone trend, sentiment also hit a five-year low this month, a central bank survey found. In Germany, Ifo president Hans-Werner Sinn said "the downward trend in the Ifo business climate index is proceeding in large steps."
German manufacturers, the backbone of the country's export-led economy, "reported a considerably less favorable business situation and more now anticipate a poorer business development over the coming six months," Ifo said.
On Sept. 24, a purchasing managers' index compiled by data and research group Markit for the 15-nation eurozone slid to 47.0 points in September, its lowest level since November 2001.
Copyright Agence France-Presse, 2008