Charting the global economy: UK turmoil; world economy stumbles



The turmoil in the UK rocked global markets this week as Liz Truss’s government signaled that it’s sticking with a plan for tax cuts, sending the pound to a record low and prompting the Bank of England to intervene.
While the British pound has since rebounded somewhat, there’s still concern that policy actions will threaten the central bank’s fight to contain inflation. Price pressures are rampant in the broader euro zone as well, surging 10% in September from a year ago.
In the US, Hurricane Ian made landfall on the west coast of Florida and moved into South Carolina, with projected damages set to rank the storm among the top 10 costliest in the country’s history. That’s forced major port and rail facilities across the region to halt operations, further straining supply chains.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
EuropeBloombergBritain is in a self-inflicted financial crisis that threatens to accelerate the economy’s dive into recession — and the country’s new prime minister is coming under intense pressure to blink. In the week since the government unveiled the biggest tax cuts since 1972 with scant detail of how they will be financed, the pound has crashed to its lowest-ever level against the dollar, the cost of insuring British government debt against the risk of default has soared to the highest since 2016, and the Bank of England has been forced to intervene amid concerns about the nation’s pension funds.
BloombergThe economic damage from the shutdown of Russian gas flows is piling up fast in Europe and risks eventually eclipsing the impact of the global financial crisis. Building on a model of the European energy market and economy, the Bloomberg Economics base case is now a 1% drop in gross domestic product, and the contraction could be as much as 5% if European Union members fail to efficiently share scarce fuel supplies.

BloombergGerman business confidence deteriorated further on mounting concerns over energy supplies and record-breaking inflation that’s yet to peak. A gauge of expectations by the Ifo institute slid to the lowest since April 2020.

BloombergThe euro zone’s economic crisis intensified with the first ever reading of double-digit inflation, piling pressure on the European Central Bank to keep raising interest rates aggressively. Consumer prices surged 10% from a year ago in September, data from Eurostat showed Friday.
USBloombergSay goodbye to the housing bull run. US home prices — for the first time in a decade — are falling. A national measure of prices in 20 large cities fell 0.44% in July, the first drop since March 2012, the S&P CoreLogic Case-Shiller index showed Tuesday.
BloombergMajor ports and rail facilities across the US Southeast have halted operations as Hurricane Ian — one of the strongest to ever hit the country — heads north, causing disruptions along the way and resulting in another blow for already-strained supply chains.

BloombergA key gauge of inflation picked up steam in August, while consumer spending ticked up, suggesting resilience among American households in the face of rising prices across the economy.
AsiaBloombergThe cost of shipping goods from China has slumped to the lowest level in more than two years as the world economy stumbles, dimming prospects for container carriers.
BloombergChina’s economic recovery faltered in September, with Covid lockdowns continuing to curb consumer spending and no respite seen in the housing market despite more central bank support. The first official data for September indicated that while manufacturing improved slightly, the services industry contracted for the first time since May as virus outbreaks and the Covid Zero policy continue to weigh on consumption.
WorldBloombergThe world as a whole has been jolted by the war in Ukraine, according to the OECD, which cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes too. The global economy will expand just 2.2% in 2023, the Paris-based organisation said.
BloombergHungary wrapped up the EU’s most aggressive monetary tightening cycle with a bigger-than-expected interest rate increase. Central bankers in India and Mexico also hiked rates, as did several African nations, including Nigeria, Kenya and Mozambique.
Emerging MarketsBloombergArgentina’s poverty rate remained above its pre-pandemic level in the first half of this year as high inflation eroded the benefits of the country’s economic recovery. While poverty has come down since 2020, its progress lags behind the economy’s overall recovery, including an unemployment rate at its lowest level since at least 2016.
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