Effects of global slowdown more pronounced in India: IMF chief
https://timesofindia.indiatimes.com...-india-new-imf-chief/articleshow/71498176.cms
https://timesofindia.indiatimes.com...-india-new-imf-chief/articleshow/71498176.cms
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The below is from the WSJ
https://www.wsj.com/articles/imf-an...n-of-deteriorating-global-outlook-11570543201
IMF and World Bank’s New Leaders Warn of Deteriorating Global Outlook
Their remarks will set the tone for next week’s annual meetings in Washington
The new leaders of the International Monetary Fund and World Bank warned in twin speeches of a deteriorating global economic outlook, just a week before they will lead the annual meetings of their institutions for the first time.
“The global economy is now in a synchronized slowdown,” said Kristalina Georgieva of Bulgaria, the former No. 2 official at the World Bank, who took the helm of the IMF a week ago.
Her counterpart, David Malpass, a former U.S. Treasury official who became the World Bank’s president in April, offered his own assessment in a speech at McGill University, saying that in June the World Bank had forecast 2.6% global growth in 2019—the slowest in three years—and “we now expect growth to be even weaker than that, hurt by Brexit, Europe’s recession and trade uncertainty.”
Their remarks set the tone for the IMF and World Bank meetings in Washington, where most of the world’s finance ministers and central bankers will be gathering. The new duo, both economists by training, represent a contrast from their predecessors. Christine Lagarde, the former IMF leader, was a lawyer and former French finance minister, while Jim Yong Kim, formerly at the World Bank, was a doctor and former university president.
The global economy they face presents a sharp reversal from two years ago when 75% of the world was accelerating, said Ms. Georgieva, noting that in 2019 the IMF now expects slower growth in 90% of the world and that “the widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade.”
Many economists agree that trade tensions loom heavily over the global economy. Ms. Georgieva said that according to IMF research, the cumulative economic loss from the trade war could amount to $700 billion by 2020, or about 0.8% of global gross domestic product.
But the attendees at the IMF and World Bank meetings aren’t the trade officials who could resolve those tensions, and Ms. Georgieva and Mr. Malpass both highlighted the policies that fiscal and monetary authorities could take to boost their economies.
“Trade uncertainty is an important factor in the slowdown,” Mr. Malpass said in an interview with The Wall Street Journal, but “growth could accelerate if the nontrade aspects of this were improved.”
Mr. Malpass highlighted what could be a major policy focus for finance ministers: “If developed countries made changes in their government spending practices that were more pro-growth, and their tax practices were more pro-growth.” For central bankers, he suggested: “Getting to this frozen capital. Understanding why it is that negative interest rates don’t seem to be stimulative becomes an important part of this challenge.”
The economy doesn’t necessarily need to deteriorate further, he said.
“My thought is the slowdown is what’s in the data now,” he said. “The question is what policy changes will be made to change the course of the slowdown.”
For her part, Ms. Georgieva singled out three countries—Germany, the Netherlands and South Korea—as places that could benefit from increasing government spending.
“Our research shows that changes in spending are more effective and have a multiplier effect when countries act together,” she said an event at the IMF’s offices in Washington. “If the synchronized slowdown worsens, we may need a synchronized policy response.”
https://www.wsj.com/articles/imf-an...n-of-deteriorating-global-outlook-11570543201
IMF and World Bank’s New Leaders Warn of Deteriorating Global Outlook
Their remarks will set the tone for next week’s annual meetings in Washington
The new leaders of the International Monetary Fund and World Bank warned in twin speeches of a deteriorating global economic outlook, just a week before they will lead the annual meetings of their institutions for the first time.
“The global economy is now in a synchronized slowdown,” said Kristalina Georgieva of Bulgaria, the former No. 2 official at the World Bank, who took the helm of the IMF a week ago.
Her counterpart, David Malpass, a former U.S. Treasury official who became the World Bank’s president in April, offered his own assessment in a speech at McGill University, saying that in June the World Bank had forecast 2.6% global growth in 2019—the slowest in three years—and “we now expect growth to be even weaker than that, hurt by Brexit, Europe’s recession and trade uncertainty.”
Their remarks set the tone for the IMF and World Bank meetings in Washington, where most of the world’s finance ministers and central bankers will be gathering. The new duo, both economists by training, represent a contrast from their predecessors. Christine Lagarde, the former IMF leader, was a lawyer and former French finance minister, while Jim Yong Kim, formerly at the World Bank, was a doctor and former university president.
The global economy they face presents a sharp reversal from two years ago when 75% of the world was accelerating, said Ms. Georgieva, noting that in 2019 the IMF now expects slower growth in 90% of the world and that “the widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade.”
Many economists agree that trade tensions loom heavily over the global economy. Ms. Georgieva said that according to IMF research, the cumulative economic loss from the trade war could amount to $700 billion by 2020, or about 0.8% of global gross domestic product.
But the attendees at the IMF and World Bank meetings aren’t the trade officials who could resolve those tensions, and Ms. Georgieva and Mr. Malpass both highlighted the policies that fiscal and monetary authorities could take to boost their economies.
“Trade uncertainty is an important factor in the slowdown,” Mr. Malpass said in an interview with The Wall Street Journal, but “growth could accelerate if the nontrade aspects of this were improved.”
Mr. Malpass highlighted what could be a major policy focus for finance ministers: “If developed countries made changes in their government spending practices that were more pro-growth, and their tax practices were more pro-growth.” For central bankers, he suggested: “Getting to this frozen capital. Understanding why it is that negative interest rates don’t seem to be stimulative becomes an important part of this challenge.”
The economy doesn’t necessarily need to deteriorate further, he said.
“My thought is the slowdown is what’s in the data now,” he said. “The question is what policy changes will be made to change the course of the slowdown.”
For her part, Ms. Georgieva singled out three countries—Germany, the Netherlands and South Korea—as places that could benefit from increasing government spending.
“Our research shows that changes in spending are more effective and have a multiplier effect when countries act together,” she said an event at the IMF’s offices in Washington. “If the synchronized slowdown worsens, we may need a synchronized policy response.”
Debt-ridden Pakistan government hands free rein of Gwadar Port to China, country to army chief
https://www.firstpost.com/world/deb...ar-port-and-nation-to-army-chief-7476191.html
https://www.firstpost.com/world/deb...ar-port-and-nation-to-army-chief-7476191.html
https://www.bloombergquint.com/econ...&utm_medium=social&utm_campaign=whatsapp_feed
IIP: India’s Industrial Output Contracts The Most Since 2012
Oct 11 2019, 6:04 PMOct 11 2019, 8:25 PMOctober 11 2019, 6:04 PMOctober 11 2019, 8:25 PM
India’s industrial output contracted in August due to weakness in the manufacturing and electricity sectors.
The Index of Industrial Production fell by 1.1 percent in August 2019 over a year ago, compared to an increase of 4.3 percent in July. A Bloomberg poll of 31 economists had forecast IIP growth at 1.7 percent.
The fall is the steepest in the last 81 months, said Devendra Kumar Pant, chief economist at India Ratings and Research.
The contraction in IIP in August defied expectations that industrial output would pick-up ahead of the festive season.
“It appears pre-stocking due to festive demand in September and October has not taken place. Going forward, the IIP is likely to show erratic, low growth trend,” said Pant. He added that the policy measures announced by the government recently are supply side interventions and unlikely to boost demand. “With no fiscal space available to the government, it is unlikely that the demand in going to return back soon,” Pant added.
Sectoral Trends
The manufacturing sector continued to contribute to weakness in industrial output. Fifteen of the 23 manufacturing industry groups showed negative growth, leading to an overall contraction.
Use-Based Classification
When divided by use-based classification, capital good and consumer durables contributed most to the weakness. Capital goods data is often volatile due to lumpy orders.
“Notwithstanding an unfavourable base effect and the disproportionate impact of the weakness in a few segments of machinery and equipment, the sharp 21 percent contraction in capital goods output in August 2019 highlights the weakness in investment activity,” Nayar said.
IIP: India’s Industrial Output Contracts The Most Since 2012
Oct 11 2019, 6:04 PMOct 11 2019, 8:25 PMOctober 11 2019, 6:04 PMOctober 11 2019, 8:25 PM
India’s industrial output contracted in August due to weakness in the manufacturing and electricity sectors.
The Index of Industrial Production fell by 1.1 percent in August 2019 over a year ago, compared to an increase of 4.3 percent in July. A Bloomberg poll of 31 economists had forecast IIP growth at 1.7 percent.
The fall is the steepest in the last 81 months, said Devendra Kumar Pant, chief economist at India Ratings and Research.
The contraction in IIP in August defied expectations that industrial output would pick-up ahead of the festive season.
“It appears pre-stocking due to festive demand in September and October has not taken place. Going forward, the IIP is likely to show erratic, low growth trend,” said Pant. He added that the policy measures announced by the government recently are supply side interventions and unlikely to boost demand. “With no fiscal space available to the government, it is unlikely that the demand in going to return back soon,” Pant added.
Sectoral Trends
The manufacturing sector continued to contribute to weakness in industrial output. Fifteen of the 23 manufacturing industry groups showed negative growth, leading to an overall contraction.
- Manufacturing output contracted by 1.2 percent in August compared to 4.2 percent growth in the previous month.
- Mining output was at 0.1 percent in August against 4.9 percent last month.
- Electricity generation contracted by 0.9 percent compared to 4.8 percent in July 2019.
Use-Based Classification
When divided by use-based classification, capital good and consumer durables contributed most to the weakness. Capital goods data is often volatile due to lumpy orders.
- Capital goods output contracted by 21 percent in August against a contraction of 7.1 percent in the previous month.
- Primary goods output grew 1.1 percent in August compared with 3.5 percent in July.
- Intermediate goods output growth grew by 7 percent compared with 13.9 percent in July.
- Infrastructure and construction goods output fell 4.5 percent compared with a 2.1 percent rise in July.
- Consumer durables output contracted by 9.1 percent compared to a contraction of 2.7 percent in July.
- Growth in consumer non-durables output stood at 4.1 percent against a growth of 8.3 percent in the previous month.
“Notwithstanding an unfavourable base effect and the disproportionate impact of the weakness in a few segments of machinery and equipment, the sharp 21 percent contraction in capital goods output in August 2019 highlights the weakness in investment activity,” Nayar said.
I am expecting a full blown US recession by early to mid 2020 which will become a global contagion soon after. For those with an intellectual yet applied bent of mind concerning research, here is a useful link by the "Godfather" of the Yield Curve indicator. This is Economics in action.
From the same youtube link:
Campbell cites the fact that 7 out of the last 7 recessions had been presaged by a yield curve inversion - which is what happens when it longer term bond yields fall below shorter term bond yields in the Treasury market. He believes that this phenomenon occurs when the market participants begin to grow more pessimistic about the economic outlook. The behavior of executives, lenders, borrowers and investors can change enough during these times to actually become a self-fulfilling prophecy - producing a negative feedback loop that drives a weakening economy into a full-blown recession.
From the same youtube link:
Campbell cites the fact that 7 out of the last 7 recessions had been presaged by a yield curve inversion - which is what happens when it longer term bond yields fall below shorter term bond yields in the Treasury market. He believes that this phenomenon occurs when the market participants begin to grow more pessimistic about the economic outlook. The behavior of executives, lenders, borrowers and investors can change enough during these times to actually become a self-fulfilling prophecy - producing a negative feedback loop that drives a weakening economy into a full-blown recession.
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