Fears of an imminent global economic collapse are rising as the economies of China and the Eurozone continue to weaken.
China recorded a big drop in exports
while European manufacturing sector sank to its lowest level of business
activity in four years.
Data showed Chinese exports were down
4.4% in December – the largest fall since 2016. Imports fell 7.6% due to less
than forecasted demand among Chinese consumers.
China’s results were the first sign
to alarm economists whose fears have been compounded by an economic slump on
Eurozone manufacturing output also
fell sharply in November.
The EU statistics office, Eurostat,
estimated that industrial production slipped by 1.7% in November compared to
the previous month and by 3.3% for the year. The decline strongly reflects the
Eurozone’s economic slowdown in recent months.
These numbers should be expected
after economies of key European countries continued to weaken during the past
For quite some time now, the ongoing
US-China trade dispute have ignited fears of continued volatility of the global
economy because of its impact on global trade.
Although there are early signs of
positive developments between Washington and Beijing, global economic growth
has already taken a beating.
Financial markets around the world
sold off sharply on Monday, with the FTSE 100 shedding about 70 points and
losses on bourses across Europe.
Wall Street futures – financial
contracts betting on future share prices – also indicated losses in New York.
Some economists have taken action to
allay fears of a looming global recession
by saying that problems which caused the Europe and China plunges could
From Banda Szendrei, an economist at
consultancy Oxford Economics:
“In Germany, November backlogs were
at their highest, manufacturing orders were on an uptrend and unemployment was
the lowest since 2008, supporting our view that industrial activity will
Meanwhile Christ Turner, head of
foreign exchange strategy at ING in London, chimed the following opinion:
“With the Federal Reserve
signaling a pause in the tightening cycle… we don’t expect China’s trade
numbers to have a long-lasting negative impact on sentiment.”