Global Economic Slowdown Sparks Recession Fears and Vulnerability in Major Economies

Euro zone business activity contracted more than expected in July, with the services industry experiencing a decline in demand and factory output falling at the fastest pace since the start of the COVID-19 pandemic. Germany and France, the two largest economies in the euro zone, both experienced contractionary territory, raising concerns of a potential recession. The European Central Bank's sustained campaign of interest rate rises is starting to impact consumers and dent the services sector. The decline in economic activity poses questions for the bank as it balances its fight against record inflation with the potential economic damage it could cause.