Geo-Economics and Politics

Global recession predicted and other economy stories you need to read this week

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From ECB interest rate hikes to economists predicting a global recession, these are the top economics stories this week. Image: REUTERS/Wolfgang Rattay

Stephen Hall
Writer, Forum Agenda
Ian Shine
Senior Writer, Forum Agenda
Joe Myers
Writer, Forum Agenda
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  • This weekly round-up brings you the key economic stories from the past seven days.
  • Top stories: Europe's central bank hikes interest rates again; US economy rebounds but downturn still expected; Economists predict global recession.

1. US economy beats expectations but downturn still looms

US economic growth rebounded more than expected in the third quarter. GDP increased at a 2.6% annualized rate, the Commerce Department said in its advance estimate on 27 October.

This followed two straight quarterly decreases in output, which had raised concerns that the economy was in recession.

US GDP growth bouncing back global recession top economy stories news
US GDP growth is bouncing back, but fears of a global recession remain. Image: US Bureau of Economic Analysis

However, the risks of a downturn have increased as the Federal Reserve doubles down on interest rate hikes to fight the fastest-rising inflation in 40 years. It has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, marking the swiftest pace of policy tightening in a generation.

These rate rises have curbed consumer spending, which accounts for more than two-thirds of US economic activity. Spending growth slowed to 1.4% in the third quarter from 2.0% in April-June.

2. Europe's central bank raises interest rates again

The European Central Bank (ECB) is raising borrowing costs at its fastest pace on record as it tries to battle 9.9% inflation. Further hikes are almost certain too, with the bank unwinding a decade of stimulus measures.

It has raised its deposit rate by 75 basis points to 1.5%, taking the total increase to 2 percentage points in its past three meetings. It is also changing the terms of its ultra-cheap loans to commercial banks.

"The Governing Council took today's decision, and expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target," the ECB said.

The euro dropped and European government bond yields slid after the announcement, which was in line with market expectations.

3. News in brief: Stories on the economy from around the world

The global economy is approaching a recession, a Reuters poll of economists suggests. Those surveyed once again cut growth forecasts for key economies.

Australian inflation hit a 32-year high in the last quarter, according to data from the Australian Bureau of Statistics, with the annual rate hitting 7.3% in September.

It comes as Australia’s economic growth is expected to slow sharply next financial year, according to new forecasts released by the government on 25 October.

German consumer sentiment recovered slightly in November after four consecutive months of record lows, according to a survey by market research institute GfK.


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South Korean economic growth fell to its slowest pace in a year in the third quarter, although it did beat expectations slightly. The country's GDP grew by a seasonally adjusted 0.3% in real terms from the previous quarter, the Bank of Korea estimated on 27 October.

The Bank of Canada announced a smaller-than-expected interest rate hike on 26 October. It increased its policy rate by half a percentage point to 3.75%.

The Chinese economy expanded by 3.9% in July-September from a year earlier, outstripping the 3.4% pace forecast in a Reuters poll.

Former US Treasury Secretary Larry Summers has warned about the long-term prospects for bringing down inflation.

The Turkish central bank has raised its projection for year-end inflation, forecasting that consumer inflation would hit 65.2% at the end of 2022.

Energy prices are expected to decline by 11% in 2023 after a 60% rise in prices this year following Russia's invasion of Ukraine, according to the World Bank’s Commodity Markets Outlook report.

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