global economy

Eurozone economy in ‘steep downturn,’ says key survey

Agence France-Presse

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Eurozone economy in ‘steep downturn,’ says key survey

CLOSED. This photo taken on November 12, 2020, shows the empty terrace of a closed restaurant on the Champs-Elysees avenue in Paris, during a second national lockdown in France aimed at curbing the spread of COVID-19.

Photo by Stephane de Sakutin/AFP

IHS Markit forecasts the eurozone economy would contract by a historic 7.4% in 2020 and recover by just 3.7% in 2021

Eurozone economic activity plunged in November, a key survey showed on Monday, November 23, due to a resurgence of lockdowns across Europe as the second wave of the coronavirus tightened its grip.

“The eurozone economy has plunged back into a severe decline in November amid renewed efforts to quash the rising tide of COVID-19 infections,” said Chris Williamson, chief economist at IHS Markit.

The firm’s closely watched Purchasing Managers’ Index (PMI) plummeted to 45.1 points from 50.0 points in October, well below the key 50-point level which indicates growth.

IHS Markit said this offered a clear indication that the economy in the 19-member single currency area would stumble back into recession in the 4th quarter, erasing any gains seen over the middle of the year.

Importantly, “the further downturn of the economy…represents a major setback to the region’s health and extends the recovery period,” Williamson said.

All was not bleak, with survey results demonstrating emerging optimism for a better recovery next year on the back of signs effective vaccines were close at hand.

Still, IHS Markit said it forecast the eurozone economy would contract by a historic 7.4% in 2020 and expected a recovery of just 3.7% in 2021.

IHS Markit said the downturn in November was broad but would hit the service sectors the hardest, especially those most constrained by the partial lockdowns.

France, the bloc’s second biggest economy, was particularly hard-hit with a result of just 39.9 points on the PMI, indicating a very deep downturn.

The eurozone’s No. 1 economy, Germany, managed to show expansion in the period, probably buoyed by factory exports to Asia and a relatively lower rate of coronavirus infections. –

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