Eurozone productions slides adding to economic slowdown fears

Production in the eurozone fell 1.7% in November, falling far further than many economists has forecast, due to a myriad of factors, including Brexit and softer global demand for goods and services.

The decline in industrial output – one of the biggest slides seen in three years – was broad-based across the eurozone, with key member states including Germany, France, Italy and Spain all seeing significant declines.

The fall in output was driven by a 2.3% drop in capital goods, but production was down across all product groups, with Ireland suffering the largest slump in overall production in the eurozone. Portugal followed close behind, alongside Germany and Lithuania.

Recession fears begin to heighten

The news of production output in decline across the eurozone comes just a week after the economic bloc announced that consumer confidence in the area had decreased markedly in December, signalling that some of the region’s largest economies are slowing down could even slip in recession.

Fears of a technical recession in large Eurozone economies are mounting as industrial production in November provided a harsh reality-check for economists,’ senior eurozone economist at ING Bert Colijn said.

‘The third quarter slowdown to just 0.2% GDP growth was expected to be followed by a bounce back in Q4, but the evidence is mounting that this is unlikely.’

‘Consumption looks to have performed somewhat better, but concerns about a technical recession in Germany and Italy are nonetheless rising,’ he added.

Most major economies are slowing down

It is worth noting that eurozone economies are not alone, with many of the world’s largest economies showing signs of slowing, according to a recent assessment by the OECD.

In the French think tank’s latest report, it shows that some of the biggest economic declines are not only emanating from Europe, but that weakening growth momentum is being witnessed in the US, Canada and Brazil too.

‘In the United States and Germany, the tentative signs of easing growth momentum, that were flagged in last month’s assessment, have been confirmed with easing growth momentum remaining the assessment for Canada, the United Kingdom and the euro area as a whole, including France and Italy,’ the OECD said in its report.