In several of my recent articles, I have discussed global economic indicators that point to meaningful slowdown in the world economy. I wrote today on the GDPNow indicator that estimates US GDP growth for 1Q16 at 0.1%. While China’s PMI has improved in March 2016, it is too early to conclude that the country is on the path to sustainable recovery.
My fear of meaningful global slowdown and potential global recession in 2016 is further backed by EU28 economic sentiment indicator, which is at its worst level (March 2016 reading) since April 2015.
Clearly, the first three months of 2016 have been challenging for all major economies and I expect central bankers to unleash fresh round of QE if economic data remains disappointing for April 2016 and beyond.
I would also like to present another chart below that gives EU28 major import partners.
The point that I want to make here is that China accounts for 20% of imports to EU28 and if this region witnessed sustained slowdown or recession, China’s already slowing economy will be impacted further.
I must add here that it’s not just about China. The global economy is very interlinked and this would imply a chain of negative growth trigger if one major economy or region faces growth related issues. It remains to be seen if economic data continues to disappoint or if there are hopes of revival in the coming months.