The Eurozone is giving the world something to be concerned with, as data from that region has sparked fresh discussions of a weak global recovery. The PMI, or purchasing managers index, for the eurozone fell over four points to 53.8 in September, against forecasts of 55.7. This decline suggests growth coming at a much slower pace than once believed. This data, combined with the Irish GDP shrinking over 1 per cent for the three months to June, has led to discouraging sentiment about the next 12 months.
The weak figures sent shock waves throughout the region – investors quickly got rid of Irish national debt. A sharp rise in the Portugese National debt also occurred.
The chief economic adviser to the Ernst and Young Eurozone Forecast unit, Marie Diron, commented on the factors leading to the slow down, saying: “The export-driven uptick seen in the first part of the year is coming to an abrupt halt, as the slowdown in economic activity seen outside the eurozone during the summer has started to affect the single currency area.”
The deputy head of economics at Daiwa Capital Markets, Chris Scicluna, discussed the discouraging figures, saying: “Growth would fall below trend” and the issue was a “loss of momentum looking ahead”.
He added: “Major industrialised nations had a bit of a bounce-back earlier this year, but what we are now facing up to is that it wasn’t sustainable. There is no obvious engine of growth. Banks are deleveraging and credit growth is restrained. We are seeing the scarring effect of the crisis.”