EU Investor Confidence Turns Positive For the First Time Since February, but UBS Expects a Double Recession

Posted Monday, January 11, 2021 by
Skerdian Meta • 1 min read

EU Sentix investor confidence moves in positive territory

The investor sentiment in the Eurozone turned negative in March last year, after the lockdowns began, as the Sentix indicator shows. The sentiment has been negative since then, bottoming out in April and May at -40 points. It began improving until November, when we saw another dip lower, due to the new coronavirus restrictions.

However, it improved in December and today’s report is showing that the Sentix indicator has turned positive this month. But the UBS bank is forecasting another recession in the Eurozone.

Eurozone January Sentix Investor Confidence

January Sentix investor confidence 1.3 points vs 1.9 expected
December Sentix investor confidence was -2.7 points

Investor morale in the euro area continues to ride high at the start of the new year, bolstered by vaccine optimism for the most part. This is the first time that the headline reading has returned to positive territory since February last year. Sentix notes:

“Now that more vaccines have been approved, investors apparently expect a quick implementation of the vaccine strategy and thus a definitive end to the economic and personal freedom restrictions”.

UBS Revises 2021 GDP Down for the Euro Area

In a note, economists at the UBS financial firm say that there is a high risk of a contraction for the Eurozone economy in both Q4 2020 and Q1 2021, due to new coronavirus restrictions, thus, leading to a double-dip recession to start the new year.

The firm previously cut its 2021 growth forecast for the Euro area to 5% from 6.2%, but lifted its 2022 forecast to 5.4% from 5%. On inflation, the firm sees Eurozone inflation at 1.1% this year, and 1.3% next year, with the possibility of “temporary spikes”.

As for policy in the region: