Stagflation Concerns as Euro Zone Growth Slows Amid Middle East Conflict

Euro zone's private sector growth weakened significantly in March, as the Middle East conflict escalated input costs and caused major supply chain disruptions. Growth persisted, yet at the slowest in months, with new orders declining and business confidence plunging to levels seen during the Ukraine crisis.

Growth in the Euro zone's private sector took a significant hit in March, driven largely by the ongoing Middle East conflict which has caused input costs to spike and led to the worst supply chain disruptions in over a year, a recent survey reveals.

The S&P Global flash euro zone Composite Purchasing Managers' Index dipped to 50.5 in March from February's 51.9. Remaining above the critical 50.0 growth marker for 15 consecutive months, new orders plummeted, reflecting weakening demand particularly in the services sector.

Inflationary pressures are rising, with both manufacturing and services experiencing cost surges. Chris Williamson of S&P Global notes that this situation is ringing stagflation alarm bells, as business confidence hits low levels not seen since Russia's invasion of Ukraine.

(With inputs from agencies.)