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Charting the Global Economy: ‘Contraction’ Becomes Common Theme

Published 05/01/2020, 01:00 PM
Updated 05/01/2020, 01:18 PM
© Reuters.  Charting the Global Economy: ‘Contraction’ Becomes Common Theme

(Bloomberg) -- The coronavirus pandemic is shutting the lights off for the global economy.

The health crisis has morphed into economic catastrophe for Europe. The sum of all goods and services produced in the U.S. shrank the most since the last recession and a gauge of factory output last month was the worst in the post-World War II era, data this week showed.

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

U.S.

The record-long expansion of the world’s largest economy is all but officially over as the government’s initial estimate of first-quarter gross domestic product showed a 4.8% annualized rate of contraction. While that’s the weakest performance since 2008, the current quarter is likely to be much worse.

The April Institute for Supply Management manufacturing survey underscores the economy’s rapid descent at the start of the second quarter. A measure of factory output plummeted to the worst in records back to 1948, while the purchasing managers group’s employment gauge dropped to an almost 71-year low.

Europe

The euro-area economy plunged into a record contraction, an outcome that will only add more urgency to controversial demands for joint government fiscal support.

France’s economy is set to shrink by 8.6% this year in Bloomberg Economics’ central forecast, and that assumes the pandemic is brought under control and government support limits any lasting damage. The real danger is that the administration does too little or that support fails to reach those who need it, weoghing on GDP and pushinh up debt.

Asia

China’s first official data for April suggest the economy has split into two tracks, with a domestic rebound undercut by weak overseas demand.

The Bank of Japan took further action Thursday to reduce its large-scale buying of stock funds crowding out private investors.

Emerging Markets

More African central banks joined the global rate-cutting trend this week, with Guinea, South Sudan, Rwanda and Botswana easing for the first time in 2020. Zimbabwe reduced borrowing costs for the second time this year and Kenya for the third time.

Turkey’s central bank lowered its inflation expectations for the end of this year, opening up more space for additional interest-rate cuts as policy makers seek to prop up the economy at the risk of weakening the lira.

World

The world economy is entering a new stage of the coronavirus crisis as governments inch toward easing restrictions. It’s a phase that entails stark trade-offs between economic growth and risking another wave of infections and death.

©2020 Bloomberg L.P.

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