Recession fears grow as markets slump

By Doug Mattushek - 14 August 2019Views : 778

Fears of a global recession have increased after markets in China and Germany took a hit on Wednesday.

Reuters revealed that industrial output in China dipped to a 17-year low in July as the trade war with the United States heats up. Analysts had predicted that it would slow to 5.8% - down from June’s 6.3% - but the actual number was 4.8%, the lowest since February 2002.

Larry Hu, head of Greater China economics at Macquarie Group in Hong Kong, doubts the picture will get brighter anytime soon.

"China's economy needs more stimulus because the headwinds are pretty strong and today's data is much weaker than consensus," Hu told Reuters.

"The economy is going to continue to slow down. At a certain point, policymakers will have to step up stimulus to support infrastructure and property. I think it could happen by the end of this year."

Additionally, Germany's economy hit the breaks on Wednesday, with reports revealing that Europe’s biggest economy had shrak 0.1% in the second quarter of 2019. Weak demand is blamed for negatively affecting German manufacturers.

The MSCI world equity index, responsible for tracking shares in 47 countries, was also down 0.2%.