Around the economic globe in 5 minutes
Global stocks are struggling to get out of a bearish stranglehold, investors in mature-market bonds are having a field day and the Baltic Dry Index, widely watched by economists as an indicator of global trade, has collapsed.
Prominent economists are forecasting a significant deceleration of global economic growth and even double-dip recessions on the back of severe cuts in government spending and tax increases in some European countries as a result of huge budget deficits.
Yes, you may well ask whether doom and gloom are our destiny.
Let us consider the current global economic environment. The main focus at this stage is on the European economy. That economy is holding up stronger than generally expected and although the GDP-weighted PMI was somewhat lower than for the previous month, the measure continues to point to an economic expansion in the euro zone. The Markit Manufacturing PMI for the euro zone in June came in marginally lower than that of May, measuring 55.6% compared to 55.8%, while the Services PMI dropped slightly to 55.5%.
The manufacturing industry in Italy, which is suffering from severe debt migraine and is the most worrisome country in the economic zone, managed to expand at a faster rate, with the Markit Manufacturing PMI rising from 54.0% to 54.3%, citing improving conditions in key export markets. The Markit Services PMI, however, declined from 53.7% to 51.5% but still signals expansion.
In Ireland, the other problem child of the European Union, the NCB Republic of Ireland Services PMI rose at the fastest pace since October 2007 from 52.4% in May to 55.4% in June.
Growth in Germany’s economy continues unabated with both the Markit Manufacturing PMI and Services PMI remaining unchanged at 58
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