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Largest Economies in the World Move Towards Deceleration

Momentum is decreasing in the world’s leading economies, according to an indicator used by the OECD to predict turning points.

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Momentum is decreasing in the world’s leading economies, according to an indicator used by the OECD to predict turning points.

The composite principal indicator is the latest sign of a synchronized slowdown in global growth, which adds to the recession warnings caused by industrial figures in Germany last week and the fall of China’s trade figures on Monday.

The indicator, designed to anticipate turning points six or nine months in advance, has been declining since the beginning of 2018 and fell again in November. The OECD highlighted the US and Germany, where he said that the “provisional signs” of a slowdown have already been confirmed.

Just two weeks after the beginning of 2019, the economic indicator of the OECD follows a series of figures that mean that this year’s growth could be even slower than is currently anticipated. For Bloomberg Economics, the data point to “a slowdown, not a debacle,” but still the loss of momentum is “surprising.”

China

Trade tensions with the US appear in the data. Chinese exports fell 4.4 percent in December compared to the previous year, marking the worst performance in terms of dollars since 2016. Imports also fell more since 2016, suggesting a weakening of demand in the country that could have implications for exporters to China.

Euro zone

The industry in the main economies of the region had a bleak month in November, with a decrease in production of 1.7 percent. A plunge in Germany triggered suspicions that the economy could shrink a second time this quarter, which implies a technical recession. There are also concerns about the Italian economy, while unrest and protests in France have hit the growth there.

USA

Employment growth remains strong, according to the latest payroll report, but activity indicators have weakened. The Key Manufacturing Index of the Supply Management Institute is at a minimum of two years, and the housing market is cooling. The overall expansion is forecast to moderate this year, in part due to a gradual increase in Trump government tax cuts.

Federal Reserve policymakers have taken note of the change in outlook and suggested that they could stop their cycle of rising interest rates as the situation becomes clearer. The president of the entity, Jerome Powell, said last week that the Fed can be “patient and flexible and wait to see the evolution.”

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