Global economy: Japan’s and other factories’ prospects are bleaker due to U.S. recession fears

Global economy: Japan’s and other factories’ prospects are bleaker due to U.S. recession fears

Global economy: Japan’s and other factories’ prospects are bleaker due to U.S. recession fears

List of countries with highest default risk 2022 (credits:google)

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  • As China’s COVID-19 limits disrupted supply chains, Japan’s factory activity growth dropped to a four-month low in June.
  • Many other Asian countries were also struggling with rising dangers to the outlook from a potential U.S. recession.
  • Data released on Thursday revealed that Australia’s manufacturing activity remained stable this month.
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As China’s COVID-19 limits disrupted supply chains, Japan’s factory activity growth dropped to a four-month low in June. Many other Asian countries were also struggling with rising dangers to the outlook from a potential U.S. recession.

Data released on Thursday revealed that Australia’s manufacturing activity remained stable this month. These results, along with those for Japan, come before a number of European and American purchasing managers’ index (PMI) surveys that are scheduled to be released later in the day.

The figures will be widely watched as financial markets worry about the Federal Reserve’s fast interest rate increases and the more aggressive tightening it plans to implement in the coming months, both of which have significantly increased the likelihood of a U.S. recession.

“The global macroeconomic outlook has deteriorated materially since end-2021,” said Fitch Ratings, which slashed this year’s global growth outlook to 2.9% in June from 3.5% in March.

“Stagflation, which is characterised by persistent high inflation, high unemployment and weak demand, has become the dominant risk theme since late 1Q22 and a plausible potential risk scenario,” it said in a report released this week.

As central banks around the world tighten monetary policy to combat stubbornly high inflation, an increasing number of market participants, including American investment firm PIMCO, are expressing concern about the possibility of a recession.

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