January 14, 2019 | Global Growth Heading Down on Record Debt and Less Cash Flow

Further to my article last week Highly coupled global growth engines slowing all together, weaker economic data out of China and Europe this morning are roiling world markets.

Chinese trade slumped in December, sending regional stocks and the Australian dollar lower, as an unexpected fall in both exports and imports underlined the impact of the trade war and economic slowdown.

Exports in dollar terms fell 4.4 percent from a year earlier, while imports dropped 7.6 percent. Both were the worst result since 2016, and left a trade surplus of $57.1 billion.

Here is a direct video link.

The slowdown is becoming apparent in areas as diverse as iPhone salesand labor productivity. The economy may have barely grown in 2018 and is facing “long-term and very difficult times,” Xiang Songzuo, the former chief economist at Agricultural Bank of China Ltd., said in a speech in Beijing last month.

At the same time, Eurostat data just reported that factories across the eurozone suffered their biggest plunge in output in almost three years as European industrial production shank 1.7% in November–3.3% lower than in November 2017.  See Recession fears grow as Eurozone factories stumble and China exports fall.

This is not about trade tariffs which, so far, affect about 4% of global goods; this is about a global downturn in consumption as countries, companies and households struggle under the weight of record debt and shrinking cash flows.

Danielle Park January 14th, 2019

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