Economic confidence in the eurozone improved to a four-month high in July as improving sentiment in the industrial and service sectors strengthened amid the relaxation of coronavirus containment restrictions, survey data showed this week.

The eurozone economic sentiment index climbed to 82.3 in July from 75.8 in the previous month, survey data from European Commission showed. The score was forecast to rise to 81.0. Notwithstanding the improving sentiment, it remained well below the pre-coronavirus levels and points to gross domestic product (GDP) contracting by two per cent year-on-year at the start of the third quarter, Jason Tuvey, an economist at Capital Economics, said.

Meanwhile, at its two-day monetary policy meeting that ended last Wednesday, the Federal Reserve held interest rates steady, a decision that was accompanied by a tepid outlook on the coronavirus-beleaguered economy. In a move that was widely expected, the central bank kept its benchmark overnight lending rate anchored near zero, where it has been since March 15 in the early days of the pandemic.

“Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year,” the post-meeting statement said.

Along with keeping rates low, the Federal Open Market Committee, which sets monetary policy, emphasised its commitment to maintain its bond-buying and the array of lending and liquidity programmes that it launched in response to the pandemic.

Finally, in Germany, GDP fell by 10.1 per cent in the second quarter of 2020 compared with the first quarter. That was the biggest decline since 1970, according to the German statistics office’s flash estimate and comes amid fears of a second wave of the coronavirus pandemic across Europe.

Economists had expected a nine per cent decline. Compared with last year, Thursday’s figures were even worse. GDP was down by 11.7 per cent for April to June, with an overall collapse in exports and household spending alongside an increase in state spending.

This report was compiled by Bank of Valletta for general information purposes only.