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Eurozone economy at 16-month low in June due to Ukraine war and pandemic: Report

Eurozone economy at 16-month low in June due to Ukraine war and pandemic: Report

Eurozone economic growth fell sharply to a 16-month low in June, reflecting a slowdown in demand growth, according to preliminary PMI data from S&P Global, an American publicly traded company.

Manufacturing output declined for the first time in two years and expansion in service sector activity slowed significantly, particularly for consumer-facing services.

The survey by S&P Global showed that companies have lowered their business expectations for production in the coming year to the lowest since October 2020.

“Economic growth is showing signs of faltering as demand loss already from the pandemic is fading, being offset by cost shocks and declining business and consumer confidence,” said Chris Williamson, economist at S&P Global. statement, as reported by Bloomberg.

Both the stagnation in demand and the deteriorating outlook were widely attributed to rising costs of living, dire financial conditions and concerns over energy and supply chains linked to the Ukraine war and the ongoing pandemic disruptions.

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Surveys of purchasing managers continued to show higher price pressures, including “a worrying increase in cost escalation in the services sector”. Williamson said, however, that the slowdown in demand pointed to a calming of commodity prices, “bringing a tentative sign of inflation peaking in the near future.”

The euro retreated against the dollar on Thursday as economic data pointed to rising prospects of a recession in Europe. Global stock markets were volatile this week after another fall, while oil prices fell further.

Government bond yields also fell in another sign that investors are more concerned about the prospect of a recession, easing some of the fiscal pressure on governments from rising interest rates.

(with inputs from agencies)

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Eurozone economy at 16-month low in June due to Ukraine war and pandemic: Report

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