Eurozone growth slowing after new COVID wave

Eurozone growth slowing after new COVID wave

Eurozone growth slowing after new COVID wave

Economic growth in the eurozone slowed to a nine-month low in December as a fresh wave of the coronavirus rattled businesses, especially in Germany, a closely watched survey said on Dec. 16. 

The purchasing managers’ index (PMI) from data firm IHS Markit showed a slip to 53.4 in December, after posting 55.4 points in November and hitting a high 59 points in August. A figure above 50 indicates growth.

Despite the headwinds, the outlook for the future remained strong, with survey respondents confident that pandemic related problems, especially on supply chains, would retreat next year.

But Chris Williamson, Chief Business Economist at IHS Markit, warned that the new Omicron variant posed “further downside risks to the growth outlook as we head into 2022.”

With record highs persisting, political pressure is increasing on policy-makers to do something to slow the surge in prices, including cutting taxes and easing up on easy money policies at central banks.

In Germany, the EU’s biggest economy, consumer prices hit a 29-year high in November, but European Central Bank chief Christine Lagarde warned that tightening monetary policy too early would hurt the region’s recovery.