“Only a few months ago, the world’s fortunes appeared increasingly robust. For the first time since the wealth-destroying agony of the global financial crisis, every major economy was growing in unison.
“So much for all that.
“The global economy is now palpably weakening, even as most countries are still grappling with the damage from that last downturn. Many nations are mired in stagnation or sliding that way. Oil prices are falling and factory orders are diminishing, reflecting slackening demand for goods. Companies are warning of disappointing profits, sending stock markets into a frenetic bout of selling that reinforces the slowdown.
“Germany and Japan have both contracted in recent months. China is slowing more than experts anticipated. Even the United States, the world’s largest economy, and oft-trumpeted standout performer, is expected to decelerate next year as the stimulative effects of President Trump’s $1.5 trillion tax cut wear off, leaving huge public debts.
“The reasons for this turn run from rising interest rates delivered by the Federal Reserve and other central banks to the unfolding trade war unleashed by the Trump administration. The likelihood that Britain’s torturous exit from the European Union will damage trade across the English Channel has discouraged investment.
“… in declaring that “the global expansion has peaked,” the brains at the O.E.C.D. effectively concluded that the current situation is as good as it gets before the next pause or downturn. If this is indeed the high-water mark of global prosperity, that is likely to come as a shock to the tens of millions of people who have yet to recover from the devastation of the Great Recession.”
“Asia’s economic prospects looked gloomy as factory activity and export orders weakened across the region in November with analysts expecting no quick rebound amid simmering global trade frictions.
“Asian shares rallied on Monday after U.S. and Chinese leaders meeting at the G20 summit in Argentina agreed on a truce in their trade conflict… But analysts said the 90-day deadline the two sides agreed upon to reach a deal meant a conclusive resolution of the row remained distant.”
“Moody’s Investors Service said on Monday its outlook for China’s regional and local governments is negative due to high debt levels of local state-owned enterprises… Beijing has pledged to expand investment in infrastructure such as railways, highways and airports to help shore up growth in the world’s second-largest economy. That places pressure on local governments to secure the funding that they need to launch infrastructure projects.”
“Economists said that the GDP deflator for agriculture [in India] is negative for the first time in many years. In other words, farmers are earning less than what they were before. Indeed, if the recent marches to New Delhi by thousands of farmers are any indication, the farm sector has already sent up emergency flares. What is notable is that even allied activities are growing slower. This doesn’t bode well for rural demand in the coming months.”
“[Pakistan’s] capital market witnessed a bloodbath on Monday and plunged to its lowest level in five weeks after the central bank raised its policy rate by 1.5%, which was higher than what most analysts had expected… Market analysts say a higher than expected increase in the State Bank of Pakistan’s monetary policy rate and a bleak economic forecast dented investors’ sentiments and drove the index down.”
“On November 7, in response to ballooning public debt, the Egyptian government announced a new package of austerity measures, including liberalising the price of bread flour as of January 1, 2019, and raising the price of Cairo metro tickets as of December 2019 following a similar fare hike in May.
This is the latest in a series of ineffectual policies that aim to tackle the growing debt crisis…”
“The next meeting of the ECB governing council will most likely mark the end of quantitative easing as we know it.
“As of January, the ECB is expected to stop adding to the 2.6 trillion euros ($2.95 trillion) of assets bought since March 2015, and only reinvest the money from the bonds that come due.”
“UK manufacturers are stockpiling goods ahead of March’s Brexit date as the prospect of queues at Britain’s ports grows more likely.
“Production remained strong across the manufacturing sector in recent months, with firms fearful that imports of raw materials will dry up in the event of a no-deal Brexit or go up in price should a deal go ahead. In response, they are making as many goods as possible and piling them up in storage, according to a quarterly survey from the EEF, the manufacturers’ trade body.”
“German Finance Minister Olaf Scholz on Saturday urged continued vigilance and increased transparency a decade after the global financial crisis, citing the risks posed by continued high government debt levels and steep unemployment in some countries. Scholz, speaking to reporters at the summit of the Group of 20 industrialized countries in Buenos Aires, noted that global economic growth was not as dynamic as in the past.”
“The Italian economy could tumble into recession in the fourth quarter of this year, the chief economist of the country’s powerful employers’ federation has said.
“Andrea Montanino, of Confindustria, issued the warning after statistics released last week showed that falling domestic demand resulted in Italy’s economy contracting for the first time in four years during the third quarter.”
“…this looming [US] budget calamity will be a severe threat to our future at every level and for almost every household in the nation.
“Where are the news reports and opinion pieces like the ones we see about climate change or the government darkness that threatens to kill democracy?”
“You rarely see [shipping] hog the headlines, but with something like 90% of global trade borne aboard the world’s fleets, it matters. And the fate of the Baltic Dry Index in recent months doesn’t paint a pretty picture at all. As a bellwether for the global economy, there are not many as reliable…
“…is it just a trade war issue? Or is there more to the slide in the BDI? Nordea’s chief analyst for Asia, Amy Zhuang, certainly sees it as more nuanced.
““The trade war reduces demand for shipping activity, so it explains at least partly the collapse of the BDI,” says Singapore-based Zhuang. “However, the general slowdown in global manufacturing is also highly correlated to the BDI, so the fall could indicate that the upturn in the global economy has come to an end this year.””
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