Are we heading towards a global economic slowdown?

[OnDoutside]

Economist David McWilliams Podcast


Highly relevant to American based DUers

With the central bank cutting interest rates last week we thought it would be a good idea to analyze the current market signals and try to breakdown what might be looming in the future for the global economy

[Wellstone ruled]

1. Watch Germany

as they are now dealing with the first leg of a downturn. Their Manufacturing has contracted as well as their Exports.

As German goes,so goes all of Eourpe.

[sandensea]

2. Latin America as well (that's 1/4 of global U.S. goods exports)

After 4 years of almost zero growth, the region's economy will likely contract by nearly 1% this year.

Most worrisome for the U.S. is the brewing recession in Mexico, which is likely to contract at least 0.5% this year after 9 years of steady (though slowing) growth.

Because U.S. trade with Latin America has become increasingly Mexico-centric, they now buy 64% of our exports to the region.

[Wellstone ruled]

3. These Countries have never

recovered from 2007 and 08.

[sandensea]

4. It's a mixed bag - and nearly all are seeing a slowdown (or recession) this year

Brazil and Argentina are indeed about flat, in per capita GDP terms, from 2008.

They had relatively mild recessions in '09, and strong recoveries in 2010-11 - but have since been stagnant.

Argentina, in particular, has been in a deep recession since Macri's debt bubble imploded in April 2018 (not unlike the Bush bubble).

Mexico and Ecuador, very slow growth: now only around 10% higher in per capita terms from 2008.

Both are now in mild recessions.

Chile, Colombia, and Peru: 20-25% higher per capita GDP than in '08 (about as much as the U.S.). They're still seeing 2-3% growth this year.

Venezuela, of course, is in a league of its own: this year's GDP per capita will be at most half of what it was in '08. This is comparable to the post-1989 collapse in the former Soviet republics.