Eurozone private sector growth almost stalled this month, a key survey showed on Tuesday, adding to evidence that the bloc is already feeling economic fallout from the U.S. and Israeli war with Iran, with inflation rising and growth slowing.
“The economic hit from higher energy prices could be felt very quickly,” Jack Allen-Reynolds at Capital Economics said. “Based on our working assumptions for energy prices, we suspect that the economy will stagnate rather than contract, but there are clearly risks in both directions.”
Interest rates are rising amid expectations of further European Central Bank rate increases to curb inflation, pushing some mortgage rates higher and denting disposable incomes.
Meanwhile, petrol prices have risen by more than 10% across the EU, while diesel is up over 20%. Even if the war ends relatively soon, prices are unlikely to fall quickly, as some energy infrastructure has been damaged and fuel bottlenecks may take several months to resolve.
The S&P Global flash eurozone Composite Purchasing Managers’ Index fell to a 10-month low of 50.5 in March, down from 51.9 in February, as the war drove input costs to their highest in more than three years and triggered the worst supply chain disruptions since mid-2022.
“The flash eurozone PMI is ringing stagflation alarm bells as the war in the Middle East drives prices sharply higher while stifling growth,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The fall in the PMI comes as German figures held up relatively well, while other major economies took a bigger hit, including France, where business confidence tumbled.
Separate data released a day earlier showed consumer confidence in the bloc falling to its lowest level since late 2023, marking one of the steepest declines on record and dropping well below its long-term average as economic pressures weigh on households.
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Oil prices fell after the U.S. expanded economic sanctions on Iran, as Tehran vowed to retaliate and warned it had tools to respond, raising concerns over potential disruption to regional oil supplies.
Ukraine’s President Volodymyr Zelenskyy said on Monday that Kyiv wants peace but will not surrender to Russia, as foreign leaders joined Independence Day events marking 35 years since Ukraine’s independence.
Kyiv has recently received a small number of U.S.-made Patriot interceptors capable of downing Russian ballistic missiles, Ukrainian President Volodymyr Zelenskyy has said. It comes as Britain and France pledged stronger military support for Ukraine.
Only four commodity vessels crossed the Strait of Hormuz on Sunday, following 13 transits a day earlier, as disruptions continue to restrict traffic through the key energy chokepoint.
A newly created pro-government political party has secured a commanding victory in Kazakhstan's snap parliamentary election, according to exit polls, strengthening President Kassym-Jomart Tokayev's influence at a pivotal moment in the country's political transition.
Kyiv has recently received a small number of U.S.-made Patriot interceptors capable of downing Russian ballistic missiles, Ukrainian President Volodymyr Zelenskyy has said. It comes as Britain and France pledged stronger military support for Ukraine.
Canada has announced nearly $20 billion in retaliatory tariffs on U.S. goods and billions in support for workers and businesses, escalating its trade dispute with Washington after President Donald Trump's latest duties took effect.
Pakistani exporters are facing soaring shipping costs to the U.S., with freight rates more than tripling on some routes as the Iran-U.S. conflict drives up war-risk insurance and fuel costs.
The trial of a Libyan man accused of building the bomb that destroyed Pan Am Flight 103 over the Scottish town of Lockerbie in 1988, killing 270 people, has been postponed by a U.S. federal judge.
France and Saudi Arabia have agreed on plans for a $7 billion manga-themed amusement complex near Paris, inspired by the hugely popular Japanese franchise Dragon Ball Z.
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