Brussels, Apr.23 ( SANA) The eurozone’s private sector slipped back into contraction in April, marking its weakest performance in nearly a year and a half since November 2024, as the war in Iran hit services and fuelled inflation.
The war in the Middle East, involving Iran, has now done what no trade dispute, tariff threat or industrial malaise of the past two years managed to achieve, Euronews reported on Thursday.
According to a flash Purchasing Managers’ Index (PMI) surveys released Thursday by S&P Global, business activity across the euro area fell sharply in April.
The services sector, the engine of the bloc’s 2025 recovery, posted its weakest reading since the pandemic lockdowns of early 2021.
Input costs surged to a more than three-year high. Business confidence dropped to its lowest since late 2022.
The flash Eurozone Composite PMI fell to 48.6 in April from 50.7 in March, well below the 50 line that separates growth from contraction. This is the weakest level in around a year and a half.
The services PMI dropped to 47.4 from 50.2, which is effectively the weakest reading since the pandemic lockdowns of early 2021.
“The eurozone is facing deepening economic woes from the war in the Middle East. The conflict has pushed the economy into decline in April, while driving inflation sharply higher,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said.
Manufacturing, paradoxically, went the other way
The factory PMI climbed to 52.2 from 51.6, a nearly four-year high, while the manufacturing output index rose to an eight-month high.
But the gain is misleading. Companies across the bloc are ordering inputs ahead of expected shortages and further price increases, lifting headline output figures in a way that reflects defensive stockpiling rather than recovering demand.
Suppliers’ delivery times in the eurozone manufacturing sector lengthened to the greatest extent since July 2022, a direct consequence of the supply-chain disruption tied to the Middle East war.
“April’s flash PMI has moved into contraction territory for the first time since late 2024, signalling a 0.1% quarterly rate of GDP decline after a 0.2% gain had been signalled for the first quarter,” Williamson added.
IMF slashes every major European forecast
The euro area took the biggest growth downgrade among major advanced economies from the International Monetary Fund’s April 2026 World Economic Outlook.
IMF staff now expect euro area growth to decline from 1.4% in 2025 to 1.1% in 2026 and 1.2% in 2027.
Both 2026 and 2027 forecasts were revised down by 0.2 percentage points versus the January 2026 Update.
Germany absorbed the largest hit, with its 2026 and 2027 growth forecasts both cut by 0.3 percentage points.
Italy stayed stuck at 0.5% annual growth across both years, already the weakest baseline in the eurozone.
MZN
