The Purchasing Managers’ Index was at its lowest point in 16 months in June.
Eurozone economic growth appears to be slowing significantly. Based on preliminary data released on Thursday, the Purchasing Managers’ Index, which reliably forecasts economic development, was 51.6 points, the lowest level in 16 months.
If the index is above 50 points, it predicts GDP growth. If, on the other hand, it is less than 50 points, it heralds a contraction in GDP. Gross domestic product means the total value of goods and services produced for final use.
The main reasons for the slowdown in economic growth are rising costs of living, tightening financial conditions and fears of continued energy prices and continued disruptions in production chains due to the war of aggression in Russia.
Index S&P emphasizes that, on this basis, euro area GDP would have grown by only 0.2% at the end of the second quarter, compared with 0.6% at the end of the first quarter. The change in three months is therefore great.
“At the same time, business confidence has plummeted to levels rarely seen before the pandemic after the economic contraction in 2012. This suggests that the threat of a recession is imminent if demand does not begin to recover,” says an S&P economist. Chris Williamson in the bulletin.
In his opinion, the economic cycle is likely to deteriorate further in July-December.
The slowdown in economic growth in the euro area will inevitably affect the Finnish economy, as 40 per cent of the value of exports of goods goes to the euro area.
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