Production rates have been slashed and new export orders dwindling as the world’s economic activity slips into recession. Economists hope for a speedy recovery after the lockdown is lifted. But their hopes have been dashed as experts predict there will be period lockdowns and tight restrictions on the movement of people until a vaccine can be discovered to cure the deadly pathogen.
Eurozone manufacturing purchasing manager’s index, or PMI, fell below the recession line for two months running.
In March it was below the 50 point level that indicates a contraction.
It sat at 44.5 in March, but in April the index slipped again to 33.4.
Economists fear that social distancing and weak demand even after the present conditions are relaxed will put further pressure on an already taxed industry.
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Chris Williamson, an economist at the IHS Markit, told the Daily Telegraph: “The rate of decline will now likely start to moderate.”
Although he warned: “The recovery will be frustratingly slow.”
The economist then added: “Steps needed to keep workers safe will mean even businesses that are able to restart production will generally be running at low capacity, and most will be operating in an environment of greatly reduced demand.
“The future for Spanish, German and Austrian factories looks extremely downbeat”.
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A recent Sentix’s confidence survey for the eurozone pointed described a “breathtaking crash” in the production rates of the bloc.
The ongoing pandemic is testing the concept of European solidarity.
Last month, German Chancellor Angela Merkel called it the biggest test the EU has ever faced.
Many national health systems in the European Union have been stretched to the brink of collapse by the coronavirus, and the bloc’s economy could see one of its sharpest declines in history.
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London-based research firm Capital Economics said the disease could result in a record-breaking 15 percent quarterly drop of eurozone gross domestic product in the second quarter.
The previous record drop was 3.2 percent in the first quarter of 2009.
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