A closely followed survey by economists on Friday showed that European economic activity declined again in September, raising expectations of a recession.
“The economic slowdown in the eurozone worsened in September, with business activity contracting for the third consecutive month, albeit modest, but the rate of decline has accelerated to the sharpest pace since 2013,” said S&P Global Flash . Except for the blockages caused by the pandemic.
The purchasing managers’ index fell from 48.9 in August to 48.2 in September, knowing that it represents an economic contraction threshold of less than 50.
“The stagnation in the eurozone is present as companies report deteriorating trading conditions and increasing price pressures associated with higher energy costs,” said Chris Williamson, chief business economist at Standard & Poor’s Global Market Intelligence.
He added: “Germany is facing the most difficult circumstances, with the economy deteriorating at a pace that we have not seen, except for the pandemic period, since the global financial crisis.”
The surge in energy prices and the sharp rise in the cost of living have dampened demand and reduced manufacturing output. Inflation in the euro area rose to 9.1 per cent during the month of August, the highest level ever, while analysts expect the rate to reach 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 that policymakers face to contain inflation by avoiding a sharp decline in the economy is thus becoming increasingly difficult “.
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