Survey shows that economic activity in the Eurozone has significantly slowed down, and the risk of stagflation has increased.

Xinhua News Agency, Brussels, April 7 (Reporter Huang Xiaolan) Data released on April 7 by S&P Global Inc., according to a survey, show that the euro area’s private-sector economic activity slowed significantly in March, driven by factors including the Middle East conflict’s role in pushing up energy costs and disrupting supply chains.

The data show that the euro area’s composite Purchasing Managers’ Index (PMI) final value for March fell from 51.9 in February to 50.7, the lowest level in nine months. By sector, the euro area’s services PMI final value for March fell from 51.9 in February to 50.2, the lowest level in 10 months.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the March PMI data indicate that the Middle East conflict has dealt a severe blow to the euro area economy. He said that due to factors including a surge in energy prices, disruptions to supply chains, turbulence in financial markets, and a further slip in demand, the growth signals that had appeared at the start of this year in the euro area are now gone, raising concerns that price increases could trigger stagflation in the short term or even a worse scenario.

Williamson said that unless the Middle East conflict is resolved quickly, the euro area economy may face a contraction risk in the second quarter of this year. Even if the conflict ends quickly, the destructive impact on the energy market from the fighting could last for several months.

(Editor: Wen Jing)

Keywords:

                                                            Euro area economy