Categories: Economy

Reducing the danger of a recession, the challenges remain Related articles

While data on the Chinese economy came in better than expected, positive news is also expected from the US and Europe this week. This means that the chance of a recession appears to be getting smaller and smaller. “There are many challenges ahead for the rest of the year.”

China’s Bureau of Statistics released preliminary data for first-quarter economic growth last week. Data from America and Europe will follow this week. ‘Pluses are expected for Germany, France and Italy. This is good,’ says Han de Jong, internal economist at BNR. Growth figures of 0.1 or 0.2% are expected for the eurozone.

Germany

The German economy contracted by 0.4% in the recent quarter. “A new negative figure would officially indicate a recession because you have two quarters of negative growth,” says De Jong. And that while not high unemployment, something that is often associated with a recession.

After the good data on the Chinese economy, positive news is also expected from the United States and Europe this week. (PNA/SIPA United States)

Early

Still, it’s not about breathing a sigh of relief, he says. “It seems a bit premature to me, there are enough challenges for the rest of the year.” For example, last week the European business confidence data for April was released. According to De Jong, there are notable differences. Business confidence was already weak and has weakened further. And in the service sector the opposite happens, a strong trust only gets stronger. It can’t stay like this.’

Also listen | BNR Panel of Economists – Panel of economists on the hard landing of the world economy

Industry is smaller than the service sector, but still ahead. “If the picture in that sector continues to be the same, the service sector will also eventually weaken,” thinks De Jong. He estimates that the chance of a recession for a number of countries is more than 50%. “Just look at Taiwan. It has a first-cycle economy with a strong predominance for electronics and exports. Orders in March are lower, 30 and 25 percent less respectively than a year ago. This could be the result of all the lockdowns in China. But usually this heralds bigger problems.’

China

Reopening China’s economy may provide global relief, De Jong thinks. ‘It’s an important sector. If activity picks up at a rapid pace this year, it could be a major boost for the global industry. And we can benefit too.’

Eng

At the same time, ING is taking China’s largest bank to court. It concerns the Industrial and Commercial Bank of China, which according to ING violated the contractual conditions. ING is now seeking $170 million in damages. “ING claims delivery has been made, but payment has not been made,” says De Jong.

Author: John Luke
Source: BNR

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