The euro zone is sinking into the biggest economic crisis in its history as measures to contain the coronavirus pandemic bring much of the business world to a standstill.
IHS Markit’s measure of private-sector activity plunged to the lowest since the index was started — and the currency bloc was formed — more than two decades ago.
The meltdown was across the region, according to the report published Tuesday. Services fared worse than manufacturing, particularly consumer-facing industries such as travel, tourism and restaurants. The composite reading fell to 31.4 in March from 51.6.
“Business activity across the euro zone collapsed in March to an extent far exceeding that seen even at the height of the global financial crisis,” said Chris Williamson, chief business economist at IHS Markit. “Business sentiment about the year ahead has plunged to the gloomiest on record, suggesting policy makers’ efforts to date have failed to brighten the darkening picture.”
The European Central Bank has scrambled to limit the damage with massive injections into the financial system, including a 750 billion-euro ($811 billion) emergency bond-buying program, and measures to direct liquidity toward struggling small and medium-sized enterprises.
Governments have started stepping up pledges of fiscal spending and loan guarantees in an attempt to shelter the economy until the worst of the pandemic has passed.
Bloomberg Economics estimates that the euro zone is on track for its biggest contraction in GDP since the currency union was founded.