"Decline in economic activity in the eurozone, Spain shows resurgence."

The economic activity in the eurozone experienced a decline again in December, marking the close of 2024 in a context of economic fragility. Despite the difficulties, Spain stood out by reaching activity levels not seen in nearly two years, suggesting a resurgence in its private sector. According to the composite PMI index of the eurozone, the figure stood at 49.6 points, a slight increase from the 48.3 recorded in November, although still below the 50-point barrier that delineates economic expansion from contraction. The services sector, in particular, showed a more optimistic performance, reaching a PMI of 51.6 points, indicating a slight expansion compared to the 49.5 points of the previous month. This increase may reflect a change in consumer perception and a potential recovery in domestic demand in countries like Spain and Ireland, which benefited from notable dynamism in their commercial activity. This trend sharply contrasts with that of other eurozone economies, where Germany, France, and Italy recorded significant declines in their commercial activity. France positioned itself as the most affected country, with a PMI of 47.5, followed by Germany with 48 points and Italy with a slight drop to 49.7. These figures suggest that economic activity in these nations is in a phase of decline, which could have broader repercussions on the stability of the eurozone. To this complex situation are added inflationary pressures that have begun to intensify, directly affecting the operating costs of companies and, consequently, the prices they pass on to consumers. Despite the difficulties, growth expectations for the next twelve months have shown some improvement, reaching their highest level in three months. However, these expectations are still considered "weak," reflecting persistent skepticism among business leaders regarding short-term economic recovery. This environment of uncertainty may influence investment decisions and business planning in the region. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, highlighted that while the PMI data does not provide a solid basis for a boom in the services sector in 2025, the fact that new orders have stopped declining and that the decrease in outstanding orders has eased is a positive sign. This analysis suggests that, although challenges remain significant, there are glimmers of optimism that could help stabilize the regional economy. It is interesting to note that companies in the services sector find themselves in a relatively more favorable position than manufacturers, as they do not directly face the threat of U.S. tariffs. This difference could ensure that industrial weakness does not drag down the entire eurozone economy in the coming year, allowing the services sector to remain a pillar of sustainability. However, inflation in the services sector has remained at concerning levels, driven by rising costs and their transfer to selling prices. This situation forces monetary policymakers to adopt a cautious approach regarding the need to adjust interest rates. De la Rubia suggested that the central bank should consider only moderate rate cuts in the first quarter of 2025, in an attempt to balance inflationary pressures and foster a conducive environment for growth. The combination of these factors—the decline in economic activity in several countries, the rebound in Spain, inflationary pressures, and moderate growth expectations—paints a complex picture for the eurozone in the near future. While some countries show signs of recovery, others struggle to stabilize their economies. This context requires constant vigilance and strategic decision-making by economic leaders to guide the region toward a path of sustainable growth. Thus, attention will focus not only on the monetary policies that are implemented but also on how different sectors of the economy adapt to a changing and challenging environment. The year 2025 could be crucial in determining whether the eurozone can overcome its current obstacles or, conversely, if it becomes trapped in a cycle of economic contraction.