The Economic Sentiment Indicator (ESI) is a composite indicator produced by the European Commission's Directorate General for Economic and Financial Affairs (DG ECFIN). Its objective is to monitor GDP growth at the level of the EU Member States and the euro area (source: Eurostat).
The ESI is a weighted average of the balances of responses to questions asked to businesses in five sectors covered by the EU business and consumer surveys. The sectors covered are industry (weight 40%), services (30%), consumers (20%), retail trade (5%) and construction (5%). We can see the balances are constructed as the difference between the percentages of respondents giving positive and negative answers.
What about the sentiment analysis in Italy? In August, out of 27 European countries, Italy was in 20th place for the level of economic sentiment, at 80.6%, 20% lower than in the pre-Coronavirus period. The beautiful country is preceded by the Czech Republic (ESI=81.4%) and followed by Albania (77%). The 3 European countries with the highest ESI are Luxembourg (98.8%), Lithuania and Germany (source: Statista).
GDP trends in Europe
In the second quarter of 2020, GDP in the euro area contracted by 12,1% compared to the previous quarter, confirming the preliminary figures released in recent weeks. The economy of the 27-state European Union area recorded a quarterly decline of 11,7%.
In the first quarter of 2020, GDP fell by 3,6 % in the euro area and by 3,2 % in the EU27. Compared to the same quarter of the previous year, GDP contracted by 15% and 14,1% respectively.
GDP trends in the United States
The most widely used indicator for predicting GDP trends in the US is the Consumer Sentiment Index (CSI). In April 2020, the CSI decreased by 29,2% compared to February of the same year. Overall, from August 2019 (CSI=89,8%) to August 2020 (CSI=74,1%), there is a difference of -15,7% in the Consumer Sentiment Index (source: Statista).
As can be seen, the US economy, like all world economies, has suffered a slowdown due to the VOCID-19 pandemic:
- US GDP -4,8% [estimated for the period January - April 2020. Before COVID, US GDP grew at 2,1%];
- Unemployment at 14,7% [before COVID it was 3,4%];
- US inflation at 0,4%;
On the other hand, the measures put in place to deal with the economic slowdown have been:
- Rate cut by the FED to 0%;
- 2700 billion dollars aid plan for companies and workers (source: SoldiONline).
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