Eurozone crisis: EU currency bloc plunges into devastating double-dip recession – new data

IHS Markit’s latest reading of its Purchasing Managers’ Index (PMI) fell below the 50-point mark that separates growth from contraction. It showed that the PMI rose this month to 48.8 from January’s 47.8 markets as the EU’s single currency bloc struggles to reopen amid fears of a third wave of Covid infections. Jessica Hinds, of Capital Economics, said: “The small upward revision to the Eurozone’s Composite PMI for February still leaves it consistent with another contraction in GDP in Q1.”

The slight increase was due to a near-record growth in manufacturing as factories were mainly exempt from the restrictions imposed to curb the spread of coronavirus.

But hospitality and entertainment venues have suffered because of forced closures by governments in order to keep citizens at home.

The Eurozone’s fragile economy shrunk in the first two quarters of 2020 and a recent Reuters survey of economists last month suggested it would do the same in the final three months of last year.

It was also suggested that the first quarter of 2021 would also see the 19-country bloc’s economy contract.

They blamed the EU’s sluggish rollout of coronavirus vaccines and concerns over mutant strains for the stalled economic activity and rising unemployment.

The Eurozone’s services dominated economy has suffered as a result of government-imposed lockdowns.

A PMI for the services industry rose to 45.7 last month, ahead of January 45.4 estimate – well below the breakeven point.

The reading is seen by experts as a good gauge for economic health.

The EU’s vaccine fiasco has prevented a boost in optimism across the bloc, with a composite future output index only increasing to 67.0 from 64.2.

Ms Hinds said: “The slow vaccine rollout and rising case numbers in France and Italy mean that the lifting of restrictions is likely to be delayed, pushing much of the vaccine-related bounce in activity into Q3.”

Unemployment levels have shot up across the EU as a result of the coronavirus pandemic.

Spain has reached a five-year high with its out of work figures.

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The European Central Bank is expected to downgrade its economic forecasts when it publishes revised predictions next week.

ECB vice-president Luis de Guindos said: “Growth in the first quarter of this year, and perhaps the second, will be relatively weaker than expected.

“But by the second half of the year, if the vaccination programme goes as well as we hope, we could see a noticeable rebound in activity.”

The ECB in December said the Eurozone’s GDP would grow 0.6 percent in the first three months of 2021, and then 1.7 percent in the second quarter.

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