A careful survey by economists on Friday showed that European economic activity declined again in September, raising expectations of a recession.
“The economic slowdown in the euro zone worsened in September, with business activity contracting for the third consecutive month, albeit modest, but the rate of decline accelerated to the most severe pace,” Standard & Poor’s Global Flash said. Since 2013, excluding pandemic blockades.
The purchasing managers’ index fell from 48.9 in August to 48.2 in September, noting that it represents a value below the economic contraction threshold of 50.
“There is stagnation in the eurozone,” said Chris Williamson, chief business economist at Standard & Poor’s Global Market Intelligence. Businesses report deteriorating trading conditions and increasing price pressures linked to rising energy costs.
He added: “Germany is facing the most difficult conditions, with the economy deteriorating at a pace that we have not seen, except for the pandemic period, since the global financial crisis.”
Skyrocketing energy prices and a sharp rise in the cost of living have dampened demand and reduced manufacturing output. Eurozone inflation rose to 9.1% in August, its highest level ever, while analysts expect the rate to hit double digits by the end of the year.
The European Central Bank raised interest rates by a record 75 basis points this month and has pledged to do everything it can to limit the rise in consumer prices.
Williamson said indicators point to a euro area contraction of 0.1% in the third quarter of 2022 and a sharp decline in the fourth quarter, noting that the challenge faced by policymakers in containing inflation by avoiding a sharp decline economy is thus becoming more and more difficult.
(AFP)
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