07:12 AM EST, 01/30/2025 (MT Newswires) -- After a few quarters of moderate growth, the eurozone economic recovery has again come to a standstill on Thursday, said ING.

After the energy and inflation shock, the eurozone returned to growth at the start of last year, but 2024 ended back in stagnation mode, wrote the bank in a note.

Growth was negative in France and Germany, with Italy seeing stagnation. Strong growth rates were still seen in Spain and Portugal as Southern Europe remains the bright spot in European economic activity right now, stated ING.

Consumers still seem to be reeling from the inflation shock, as redeemed purchasing power isn't yet translating into a strong consumption recovery. Investment remains under pressure from high inventories in manufacturing, economic uncertainty and high interest rates.

The export environment struggles because of weak external demand. Accoridng to the bank, here's the summary: weakness is all around the eurozone while other major economies show growth.

Policymakers are catching on, added ING. The European Central Bank is set to lower its interest rates by another 0.25 pp later Thursday, and ECB speakers indicate they want to move to a neutral level of interest rates -- where interest rates no longer restrict the economy -- of 2% on the deposit rate quickly.

The bank even thinks that the ECB will go slightly beyond that and lower it to 1.75%.

The European Commission (EC) presented a Competitiveness Compass on Wednesday as President Ursula Von der Leyen took European Union competitiveness as a key objective for her second term. The EC is taking a lot of leaves out of the Mario Draghi playbook to improve productivity, but the big question remains how successful it can be at implementation, asked ING. If successful, it will only boost the economic outlook for the medium term.

For the moment, the economy seems to be in a slump and the bank doesn't expect it to come out of it this winter. The first indications for Q1 are that the economy will hover around stagnation some more.

Over the course of this year, ING predicts domestic demand to drive some economic growth again.