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Global economic snapshot - October 2019

Written and accurate as at: Oct 15, 2019 Current Stats & Facts

The global economy, excluding the US, seemingly continues to suffer stubborn growth and lacklustre inflation.  Australia included.  Here is a quick snapshot of the current environment.

United States

The Fed followed through with the widely anticipated easing on 18 September, cutting the Fed funds rate to 1.75–2.00% signaling a further rise to 2.1% in 2021 and 2.4% in the long term. Meanwhile, the market is anticipating 1.25% by late 2020. Higher inflation is challenging the market view. Improved wages, coupled with robust consumption, saw CPI increase to 2.4%, the highest reading since early 2008.


European growth remains weak. Pessimism is at similar levels back in 2009 when German manufacturing was also just as soft indicating the possibility of a recession.


The Chinese economy remains under pressure prompting changes in fiscal and monetary policy to agitate stimulus. June quarter GDP was 6.2% representing the slowest growth in 27 years, and August industrial production growth was down to 4.4%, which is the lowest in 17 years. The toll of the trade war is starting to bite.


The Australian economy isn’t in a technical recession, albeit going backward on a per capita basis at -0.2% for the year not seen since the global financial crisis. The unemployment rate edged up to 5.3% while the underemployment rate rose to 8.6%. Given this, it is difficult to forecast any wage growth suggesting a high probability of the RBA cutting the cash rate to 0.5% by year-end.

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