What caused the unprecedented collapse in eurozone business activity?

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The novel coronavirus pandemic caused an unprecedented collapse in eurozone business activity.

The eurozone's business activity experienced an unprecedented collapse in March, driven by the novel coronavirus pandemic. Provisional data from IHS Markit indicated a slump in activity that far exceeded the downturn seen during the height of the global financial crisis. The company's Purchasing Managers' Index (PMI) survey for March plummeted to 31.4, the lowest figure recorded since the survey's inception in 1998, signaling a severe contraction in economic operations.
Widespread Economic Shutdown

The sharp decline in the PMI, a reading below 50 points signifying contraction, reflects a near-shutdown of eurozone economies as COVID-19 spread across Europe. Major economies such as Italy, France, Germany, and Spain have implemented stringent social and business restrictions to curb the virus's transmission. This widespread implementation of containment measures has led to a significant halt in economic activity across the region.
Disruption to Trade and Services

The services sector was particularly hard hit, experiencing a decline far more severe than that witnessed during the 2009 global financial crisis. Manufacturing also suffered, with supply chains significantly degraded. A record fall in export business occurred as cross-border trade flows seized up, exacerbated by some EU member states closing their borders to neighbouring countries, further limiting the movement of goods and people within the single market.
Record Pessimism and Job Losses

The downturn has also led to record levels of pessimism regarding future output. Expectations for the year ahead deteriorated markedly, reaching an all-time low with significant pessimism observed in both manufacturing and services sectors. Reflecting the severe economic impact, employees are being let go at the fastest rate recorded since June 2009, underscoring the widespread job losses occurring across the eurozone.
Significant GDP Contraction Predicted

Economic analysis firms have projected substantial GDP declines for the eurozone. Capital Economics pointed to a potential plunge of at least three percent in the eurozone's first-quarter GDP for 2020, compared to the preceding three months of 2019. This level of contraction would be comparable to the sharpest quarterly GDP falls experienced during the global financial crisis, highlighting the profound economic shock caused by the pandemic.

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What caused the unprecedented collapse in eurozone business activity?

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