Capital Economics: Recession still expected in euro zone

Franziska Palmas, an economist at Capital Economics, wrote in a note that the euro zone still looks likely to slip into recession later this year.

She noted that the euro zone’s purchasing managers’ index fell in July, in line with a small decline in GDP.

The data confirmed a tight labor market and strong price pressures in the services sector, which could prompt the ECB to raise interest rates further next month.

“We still expect the euro zone economy to slip into recession in the second half of 2023.”