A survey conducted by the European Central Bank covering 72 major companies in the Eurozone revealed that these businesses are encountering economic slowdowns and increasing competition from China. This situation has been exacerbated by U.S. tariffs negatively impacting business confidence and forcing Asian exporters to seek alternative markets.
Companies contacted between June 23 and July 2 reported that economic activity had slowed in recent months due to geopolitical tensions and tariffs, leading to declining consumer and business confidence.
The ECB report indicated that feedback from companies aligned with expectations of very weak growth in the second and third quarters of the year.
Rising Chinese Competition
Participants noted that downward pressure on activity and prices partially stems from weak demand, driven by a trade shift from Asia, particularly China, where exporters are seeking alternatives to the U.S. market.
While the impact has so far focused on intermediate goods, it is expected to expand in the coming months.
Conversely, several companies operating in retail and consumer services sectors reported minimal or no impact on their operations and do not anticipate significant effects in the near future.
Wage Growth Slows, But Less Than Expected
Survey participants projected that wage growth would slow from 4.5% last year to 3.3% in 2025, and further to 2.8% in 2026. This decline is less pronounced than previous estimates, suggesting that some inflationary pressures will persist in the short term.
The survey results were released a day after the European Central Bank decided to keep interest rates unchanged, amid a relatively optimistic assessment of the Eurozone economy.
This moderate optimism has reinforced investor skepticism regarding potential additional monetary easing measures in the near term, especially given the ongoing uncertainty surrounding U.S. trade policy.
— News Original —
Companies Face Economic Slowdown and Rising Chinese Competition
A survey conducted by the European Central Bank covering 72 major companies in the Eurozone revealed that these businesses are encountering economic slowdowns and increasing competition from China, in a period affected by U.S. tariffs negatively impacting business confidence and forcing Asian exporters to seek alternative markets.
Companies contacted between June 23 and July 2 reported that economic activity had slowed in recent months due to geopolitical tensions and tariffs, leading to declining consumer and business confidence.
The ECB report indicated that feedback from companies aligned with expectations of very weak growth in the second and third quarters of the year.
Rising Chinese Competition
Participants noted that downward pressure on activity and prices partially stems from weak demand, driven by a trade shift from Asia, particularly China, where exporters are seeking alternatives to the U.S. market.
While the impact has so far focused on intermediate goods, it is expected to expand in the coming months.
Conversely, several companies operating in retail and consumer services sectors reported minimal or no impact on their operations and do not anticipate significant effects in the near future.
Wage Growth Slows, But Less Than Expected
Survey participants projected that wage growth would slow from 4.5% last year to 3.3% in 2025, and further to 2.8% in 2026. This decline is less pronounced than previous estimates, suggesting that some inflationary pressures will persist in the short term.
The survey results were released a day after the European Central Bank decided to keep interest rates unchanged, amid a relatively optimistic assessment of the Eurozone economy.
This moderate optimism has reinforced investor skepticism regarding potential additional monetary easing measures in the near term, especially given the ongoing uncertainty surrounding U.S. trade policy.
(Ruters)