​Eurozone Growth Slumps to Near 2-Year Low

Rebecca McClay | FlashRatings | Friday, September 23, 2016 2:15 PM EDT
Business growth in the eurozone hit a 20-month low, according to the latest flash purchasing manager’s index (PMI) from IHS Markit.
IHS Markit’s PMI fell to 52.6 points in September from 52.9 points in August. Economic growth is above 50 points.
“The eurozone economy ended the third quarter on a disappointing note,” said IHS Markit Senior Economist Rob Dobson in a statement. “While the underlying picture remains one of sluggish growth of close to 0.3% over the quarter as a whole, it also remains clear that the economic upturn is still fragile and failing to achieve any real traction.”
Among the 19 countries in the eurozone, Germany in particular saw economic growth significantly lose momentum in the wake of a slowdown in services. On the other hand, France saw its economic output rise at its fastest pace since June 2015 as the country outperformed Germany for the first time in over four years.

IHS Market, which factors in a number of economic indicators, did not identify which one factor could have caused the downturn in growth, although regionally the services sectors has noted declines while manufacturing has improved.

Meanwhile, the International Monetary Fund (IMF) says the outlook for growth in Greece remains weak, with unemployment expected to hold in the double-digits for at least several decades. The economy in Greece, which has been making significant improvements in addressing macroeconomic imbalances, should return to slow long-term growth next year, the IMF said, noting a need for deep reforms and less austerity.

As the IMF called for Greece to make major changes to product and job markets, it also labeled fiscal targets of 3.5% primary surpluses for many decades unrealistic and called for European creditors to provide more debt relief than is currently being considered.