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Eurozone · Geopolitics · Inflation · Stagflation
Eurozone private sector growth nearly stalled in March, with the S&P Global Composite PMI falling to a 10-month low of 50.5 from 51.9, as the U.S. and Israeli war with Iran drove inflation higher and consumer confidence to its lowest since late 2023.
This economic strain is evident as input costs reached their highest in over three years and supply chain disruptions became the worst since mid-2022. Jack Allen-Reynolds at Capital Economics states the economic hit from higher energy prices is felt very quickly, projecting stagnation rather than contraction, though risks exist in both directions.
Interest rates are rising due to expected European Central Bank increases, pushing mortgage rates higher and reducing disposable incomes. Petrol prices have surged over 10% across the EU, and diesel is up over 20%.
Chris Williamson, chief business economist at S&P Global Market Intelligence, warns the flash eurozone PMI is "ringing stagflation alarm bells." Even if the conflict ends soon, prices will not fall quickly due to damaged energy infrastructure and fuel bottlenecks that require several months to resolve. While German figures held up, other major economies like France experienced significant hits.
Eurozone Confidence Plunges as Iran War Stalls Growth(current)
