The global crisis has many faces. Between inflation, deflation, recession, and weaker trade, China, the USA, Europe, and emerging markets are all involved.
The global economy is going through a series of obstacles and changes that are leaving signs of crisis all over the world: from high inflation in Europe and the USA, to Chinese deflation and the jump in raw materials first for some developing countries, each territory is affected by adverse factors.
New warnings have emerged in the past week as the main central banks discuss what to do at their September meetings. So far, central banks’ moves on interest rates have been consequential in shaping the current global crisis.
What are the winds of crisis still blowing over the world and what are the signs of recovery?
The troubles of the USA, China, Europe
The Fed, inflation, recession and technological development are the hot topics of the USA.
A key measure of consumer prices rose only modestly in July, boosting hopes that the Federal Reserve can tame inflation without triggering a recession. Back-to-back monthly gains of 0.2% were the smallest in more than two years.
Meanwhile, however, US chipmakers are struggling to fill key positions, a new study shows, with a shortage of skilled labor threatening to hamper efforts to revive the domestic industry.
China’s woes are different, but just as relevant. Chinese banks granted the lowest amount of monthly loans since 2009 in July, another sign of weak demand in the world’s second-largest economy that raises the risk of prolonged deflationary pressure.
China’s consumer and producer prices fell together for the first time since 2020, a cycle of deflation that could help global central banks fight inflation in their own countries, but signals a worsening outlook in the world’s second-largest economy.
In addition, a measure of new foreign investment in China fell to its lowest level in 25 years in the second quarter, stoking concerns about how geopolitical tensions and slowing recovery in the economy, hurting business confidence.
In Europe, inflation eased in June but remained above the European Central Bank’s 2% target as officials weigh whether to continue their unprecedented period of interest rate hikes.
German industrial production has been falling for several months, further dampening Europe’s largest economy after barely emerging from recession earlier this year. The decline in Germany was compounded by lower industrial production in France and Spain during the month.
The UK economy recorded its strongest quarterly growth in more than a year. Even with the modest 0.2% gain, the UK remains the only country in the Group of Seven that has yet to fully recover from the pandemic.
New dangers for the world
Also of note is a surge in rice prices to the highest level in nearly 15 years which is renewing fears that food costs will get much higher for the world’s poorest people. Wheat is vital to the diets of billions in Asia and Africa.
In addition, the energy inflation alarm is also ringing, with oil and gas prices surging respectively driven by tight supply with declining crude stockpiles versus a recovering demand for 2023 and some LNG disruptions from Australia which also had repercussions on the European benchmark.
Then, as economists weigh the likelihood of recessions in major economies around the world, a slew of recent data shows that a downturn in global trade is already evident.
China, the world’s biggest exporter, just reported the largest contraction in foreign shipments since February 2020. Germany, the global No. 3, saw its exports fall in the latest monthly data by the most year-on-year since the beginning of 2021.
Original article published on Money.it Italy 2023-08-12 15:39:54. Original title: Tutti i volti dell’economia globale. E della crisi mondiale
