AN, here are some signs that Europe is already feeling a strong slowdown:
“newly published European statistics that show growth slowing sharply in Germany and coming to a standstill in France. The first official “guesstimate” for the whole eurozone for the third quarter, issued last Wednesday, showed a slowdown to 0.5 per cent from 0.9 per cent reported the quarter before. Forward-looking indicators of economic activity have been falling even faster. France has suffered a precipitous decline in consumption; in Italy consumer confidence is plunging and Germany has seen the steepest fall on record in the ZEW financial expectations index, now at its lowest level since 1993.”
Stephen Roach of Morgan Stanley sees the beginning of a US slowdown, and a spillover effect to the Asian economies:
“According to our latest estimates, growth in real consumer spending slowed to a 2.5% average annual rate in the final three quarters of 2006 — a significant shortfall from the 3.7% ten-year growth trend. If that’s not a flinch, I don’t know what one is…..
I continue to believe that global growth will fall well short of consensus expectations in 2007. The IMF’s forecast of another year of 4.9% world GDP growth in 2007 — identical to the trends of the past four years and the strongest surge in global activity since the early 1970s — is very much in line with what I hear from the broad consensus of investors I meet with around the world. Implicit in this view is that nothing can stop the American consumer or the Chinese producer — conclusions that are both being drawn into sharp question in the final months of 2006. With slowdowns in the US and China likely to have a meaningful impact on two-thirds of the global growth dynamic, the burden of proof for the case for global resilience has shifted to the decoupling crowd. The sharp -2.8% annualized decline in Japanese consumption in the third quarter of CY06, together with recent disappointing trade date from Taiwan and Korea, do not exactly bode well for the decoupling case.”
I’m not sure what diappointing trade data in Taiwan and Korea he’s referring to.
