Charting the Global Economy: German Growth Outlook Deteriorates

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(Bloomberg) — Germany suffered its first recession since the start of the pandemic, dashing hopes that Europe’s largest economy could escape that fate after the war in Ukraine sent energy prices soaring.

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These problems are likely to spill over into the rest of the continent, which has relied on Germany for decades for its growth powerhouse. The country’s companies are also pessimistic, keeping a prediction of no growth in 2023.

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Inflation in both the US and the UK was stronger than expected in April, increasing bets in both regions that central banks will continue to raise interest rates.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

Europe

Germany has been the economic engine of Europe for decades, as one crisis after another has engulfed the region. But this resilience is crumbling, and alarming the entire continent.

German companies see no evidence of a pickup in Europe’s largest economy, according to a survey by business lobby DIHK. The group maintained a zero growth forecast in 2023, a more pessimistic outlook than the 0.2% expansion forecast by the European Commission.

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Britain’s inflation rate remained much stronger than expected, with the fastest increase in services and basic prices in more than three decades prompting a flurry of bets on further BoE interest rate increases.

we

Inflation and consumer spending accelerated last month, highlighting persistent price pressures and demand that should keep Fed policymakers leaning toward higher interest rates. Combined with Friday’s other reports showing a rise in orders for business equipment and an increase in merchandise imports, the data indicates demand continues to advance.

On Friday, June 2, millions of Americans are due a total of $25 billion in Social Security payments. More than anything else, this could be a critical element in forcing an end to the partisan showdown over raising the federal debt limit.

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Asia

In 2021, a remote coal-fired town in northeastern China is forced into an unprecedented financial restructuring. Its struggles have since been an ominous sign for President Xi Jinping as other indebted municipalities seem about to follow suit.

Singapore is confident that a recovery in travel boosting the services sector will help the island’s economy avoid recession this year despite the bleak global outlook.

developing markets

Brazil’s central bank may have raised interest rates earlier and higher than others, but nearly all of them – from the Federal Reserve to the Bank of England – have risen to uncomfortably high levels for politicians. Calls for an end to rate hikes are mounting in capitolures from Nairobi to Bogota to New Delhi, threatening to undermine the autonomy so crucial to central banks’ fight against inflation.

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The Mexican economy expanded at a slightly slower pace in the first quarter than previously expected, while still benefiting from strong remittance inflows and record exports to the United States. The economy has now recorded six consecutive quarters of growth.

world

Israel delivered an unprecedented 10th consecutive rate hike, and New Zealand signaled that the hike would likely be the last in the cycle, while Iceland and South Africa also tightened. Hungary cut the EU’s highest interest rate, while Vietnam and Belarus also fell. Ghana, Korea and Turkey all stood well.

Argentina’s government is calling on China to expand the bilateral currency swap for the yuan as it seeks to build up central bank reserves in an effort to contain another sell-off of the peso as inflation already soars to more than 100%, according to two people with direct knowledge. For China, it’s another opportunity – albeit a risky one in lending more to Argentina’s defaulters – to expand global use of the yuan in an effort to reduce dependence on the US dollar.

—assistance from Andrew Atkinson, Maya Averbusch, Martha Beck, Maria Eloisa Capuru, Laura Litvan, Yujing Liu, Colum Murphy, Ignacio Oliveira Doll, Jana Rando, Tom Reese, Felipe Saturnino, Zoe Schnewes, Craig Sterling, Karthikeyan Sundaram, William Wilkes and Xiao Tse Bang.