Chart of the world economy: GDP falls in the United States, rises in Europe

Major economies diverged over the past quarter, highlighted by a second consecutive decline in US gross domestic product, while eurozone results were shocked higher.

Consumer spending in the United States slowed during the April-June period, while the German economy failed to keep pace with the rest of the continent. South Korea and Mexico also recorded better than expected GDP. Despite this, the International Monetary Fund has downgraded its global growth outlook for this year and next.

At the same time, measures of global inflation remain broadly elevated, with a closely watched gauge in the United States rising the most in 40 years on an annual basis and Europe hitting a new high.

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

WE

The drumbeat of recession intensified after the economy shrank for a second consecutive quarter, as decades-high inflation sapped consumer spending and interest rate hikes in the Federal Reserve have hampered businesses and housing.

Two key inflation indicators posted larger-than-expected increases, heightening fears that prices will remain persistently high and prompting the Federal Reserve to continue aggressive interest rate hikes after a 75 basis point hike this week.

The dollar’s rise this month to its highest levels in decades has won tacit approval from Washington, offering little official restraint to the currency in a notable change from past occasions.

Europe

The eurozone economy has grown more than three times the amount economists predicted, putting it on a stronger footing as soaring inflation and a possible Russian energy cut threaten to tip it into a a recession. Despite the upside surprise, Germany, Europe’s largest economy, stagnated.

Eurozone inflation hit a new all-time high, backing calls for the European Central Bank to continue its first interest rate hike since 2011 with another big move. Consumer prices jumped 8.9% from a year earlier in July, up from 8.6% last month and again on soaring energy and food prices.

German business confidence has deteriorated to the worst level since the early months of the pandemic on growing fears that record inflation and tight energy supplies from Russia could push Europe’s largest economy into a slowdown.

Asia

South Korea’s economic expansion accelerated in the last quarter, supported by household and government spending, giving the central bank room to continue raising interest rates as it tries to contain inflation.

Prices in Japan are showing increasing signs of rising on a broader basis as soaring commodity prices and a weak yen force businesses to pass on higher costs to consumers at a rate not seen since. decades. Several gauges of inflation’s deepening trend hit record highs in June.

Emerging Markets

Inflation in Brazil has cooled slightly more than expected as President Jair Bolsonaro enacts a series of measures to rein in the rising cost of living ahead of the election and the central bank prepares for another interest rate hike. interest.

Mexico’s economic recovery continued in the second quarter, extending more than expected even as soaring prices hit consumption. The country’s growth continues, in part, because it has still not returned to pre-pandemic levels, said Gabriel Casillas, chief economist for Latin America at Barclays.

World

The IMF has slashed its global growth outlook for this year and next, warning that the global economy could soon be on the cusp of an outright recession. Global economic expansion will likely slow to 3.2% this year, less than the 3.6% forecast by the fund in April and the 4.4% seen in January.

The pandemic has left governments in developed countries with larger deficits and debts. But there is a more pressing problem: high inflation. And with supply chains still in lockdown, the standard recession-fighting measure of putting more money in consumers’ pockets risks aggravating already intense price pressures.

Aside from the Fed, other interest rate hikes this week have included central banks in the Middle East as well as those in Kazakhstan, Hungary, Lesotho and Colombia.

This story was published from a news agency feed with no text edits

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