World Economy: Chart of world economy: China’s growth is faltering, Europe is slipping towards recession
Central bankers in China and Turkey bucked a global trend of raising interest rates, and officials eased policy amid signs of economic slowdown in those countries.
China is grappling with a deepening real estate downturn, along with sluggish retail sales and rising youth unemployment. In Turkey, where inflation is at its fastest pace in 24 years, policymakers said they are only reacting to a possible slowdown in production.
Elsewhere, growth is divergent. The eurozone and Chile are at heightened risk of recession, while strong consumer spending in Japan propelled the country to its pre-pandemic size in the second quarter. Still, Japan’s economy has recovered more slowly than other nations, economists said.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
Asia
China’s economic slowdown deepened in July on a deepening housing slump and ongoing coronavirus lockdowns, with an unexpected rate cut unlikely to change things as long as these dual strains remain in place. Retail sales, industrial production and investment slowed last month, missing economists’ estimates. The Chinese central bank cut interest rates on both one-year and seven-day loans by 10 basis points.
Japan bounced back to its pre-pandemic size in the second quarter as consumer spending picked up after coronavirus restrictions on businesses ended. The gross domestic product of the world’s third largest economy grew by 2.2% on an annualized basis in the second quarter.
emerging marketsTurkey’s central bank shocked interest rates even as inflation rose to a 24-year high and the lira traded near a record low. The Monetary Policy Committee signaled that it is only reacting to a possible slowdown in output and is not initiating a monetary easing cycle, and said that “the updated policy rate level is reasonable given the current outlook,” according to a statement.
The Chilean economy is teetering on the brink of recession after flattening unexpectedly in the second quarter due to soaring inflation and heightened political uncertainty about a new constitution.
EuropeThe eurozone economy grew slightly less than originally expected in the second quarter as signs of slowing momentum continue to emerge. Analysts fear energy shortages will push record inflation higher and plunge the continent into recession.
UK inflation accelerated last month to a 40-year high, putting pressure on consumers and increasing pressure on the government and the Bank of England to act. The CPI rose 10.1% yoy in July after rising 9.4% the previous month.
UK job vacancies fell for the first time since August 2020 as real wages fell at an all-time high, pointing to mounting inflationary pressures for consumers and businesses.
US
US retail sales were flat last month on declines in auto sales and gasoline prices, although gains in other categories suggested consumer spending remains resilient.
Employers struggling to fill vacancies in the tight US job market this year had something of a silver lining: Decades of inflation were bringing retirees back into the workforce. However, recent data suggests that the trend may already be coming to an end.
WorldEuropean investment in China is holding up for now, although political ties between the two trading partners are deteriorating, and companies are looking for ways to sidestep a potential decoupling threat.
While the central banks of Turkey and China made headlines this week by cutting interest rates, at least six of their peers hiked borrowing costs, including a record 300 basis point hike by Ghana.
(Assisted by Yoshiaki Nohara, Tugce Ozsoy, Reade Pickert, Michael Sasso, Zoe Schneeweiss, Lin Zhu, Beril Akman, Andrew Atkinson, Celia Bergin, Tom Hancock, Yujing Liu, Carolynn Look and Matthew Malinowski)
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