3 of the Top 4 Economies Suffering as Global Slowdown Effects Rippling Internationally!
There is a global economic slowdown, and it could be making its way to the United States sooner than you think.
Indeed, some of the recently affected economies include those of Japan and Germany that experienced a shrinkage in the third quarter. This is as per data released on Wednesday last week, which shows a sharp contrast to that of the United States, which has been experiencing solid growth throughout the year
Plus it doesn’t end there. Analysts have expressed worrying times for the likes of China, predicting that the country is headed for deep economic malaise very soon.
Some of the reasons for the poor performance vary, however, economists believe that the likes of Japan and Germany will most likely avoid recession by bouncing back and returning to growth soon.
Shrinkage in Tiger Economies
Nevertheless, the data highlights the major ongoing challenges that some of the largest world economies are currently facing.
Indeed, Germany’s economy experienced a shrinkage for the first time in three years within its third quarter.
Moreover, it was affected by new auto emission testing procedures that resulted in the slowdown of its car sales as well as the reduction in its exports, primarily as a result of the ongoing trade war between China and the United States.
That being said, the car certification procedures are poised to be eased soon, however economists deduce that export growth could already be compromised due to demand reducing from vital trading partners such as China, Russia, and Turkey.
Evidently, Japan as a country is one that has been accustomed to proverbial recessions and even economic stagnation. In fact, their outlook is deemed brighter than that of Germany’s.
That’s because the dip in their third quarter was as a result of natural disasters. Hence, economists have predicted that consumer spending will increase in this fourth quarter.
Impending Economic Crisis in China
Moving to China, which is the world’s second-largest economy, new numbers have revealed a trend in disappointed credit growth, subdued confidence, as well as weaker consumption growth.
In fact, most economists anticipate that the government will put in place stimulus measures to curb the effects of the ongoing trade war with the United States.
According to investment bank Nomura chief analyst Ting Lu, he believes that the worst is yet to come, with growth poised to slow down significantly as the country heads into 2019.
Moreover, despite the expectations that the likes of Japan and Germany will spring back before the year comes to an end, the global economy is poised to head to 2019 looking much weaker.
As a matter of fact, the International Monetary Fund has predicted that global growth will slow down to only 2.5% in 2019 as compared to the 2.9% experienced this year.
Indeed, this may result in an obscure view of the global outlook, especially when analyzing the trade war and, how an increase in hiked US rates is having on emerging markets.
For example, Italy, which is currently locking horns with the European Union regarding its government spending, could spark a forthcoming crisis in Europe.
A Significant Slowdown
According to the chief global economist at Capital Economics, Andrew Kenningham, they believe that the IMF is quite optimistic,
Indeed, some of the risks have already been seen in a number of markets. For example, fear over the weakening global demand for oil contributed to prices in the United States dropping by a whopping 7 percent.
Moreover, major stocks indexes are also below their peaks by 5 to 7%
That being said, the major question on everyone’s is which countries you should look at to serve as the next catalysts for growth in 2019.
For example, when you look at India’s economic growth, it is crystal clear that it has accelerated tremendously this year, with a massive 8.2% increase last quarter.
That being said, as one of the world’s largest oil importers, it has felt the crippling effects of increasing oil prices this year.
Moreover, the rupee is one of the world’s biggest underperforming currencies in 2018, which has resulted in massive inflation.
Unfortunately, the United States could also be next on the list to suffer the crippling effects of economic slowdown as the effects of the tax cuts slowly begin to wither away.
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