Trade Tanks in a Bad Week for Asia Data as U.S., China Tussle
Trade data took a beating this week — especially in Asia, where it really counts.
That, and the broader theme of global economic weakness, prompted a dovish message that we heard from the European Central Bank and others around the world. It was a bit more difficult to read whether the Federal Reserve is ready to abandon policy tightening.
Here’s our weekly wrap of what’s going on in the world economy.
Trade-reliant Asia was the biggest trade-war loser this week, with exports data for Japan, South Korea, and Singapore all taking a tumble and Hong Kong reporting economic growth halved in the fourth quarter. Our global trade dashboard reflects the pain rippling across regions as the world’s two biggest economies continue sparring face-to-face — mostly on bigger and more stubborn issues like currency manipulation and intellectual property. Markets cheered that they seemed to be drawing up some plans for a deal, though Asia stocks retreated again ahead of a planned meeting Friday between President Donald Trump and China’s trade chief, Liu He. Other crowds are more preoccupied with the looming threat of U.S.-imposed auto tariffs on an already-ailing industry. The European Union is said to stand ready to impose retaliatory tariffs, even as Japan says they won’t be burned while they’re keeping up trade talks with the U.S.
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Fed officials took us for a ride again, signaling the end of their balance sheet run-off in minutes released Wednesday while showing disagreement among themselves on whether a 2019 interest-rate hike was in order. Fixing their “dot plot” could help things. The ECB sounded far more dovish amid economic growth risks, as did Australian central bankers, and the Bank of Japan even floating the possibility of more stimulus if the yen keeps strengthening. In China, the question is not “if” but “which rate” on easing ahead. Actions spoke louder than words in Indonesia, where policy makers held their fire again after a tightening bonanza in 2018, and in Turkey, where the central bank took a baby step toward easing.
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It’s Not Just Trade
Beyond the rocky exports data, Germany was a critical place to look this week as we judge just how bad the global demand picture looks. An investor confidence measure there improved for a fourth month, but Europe’s powerhouse also saw manufacturing shrink the most in six years, while confidence in the economy is at the lowest level in four years . Meanwhile, Turkey’s probably in recession. And Malaysia has deflation for the first time since 2009. For bright spots, you can take the glass-half full approach with some steady growth signs out of Israel and Thailand, though the latter faces a big test with election drama through next month.
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