After an impressive recovery period, the US is undergoing a sharp downturn. Official data shows that the US economy contracted 0.6% in the second quarter, following a 1.6% drop in the first quarter, raising concerns that the world’s largest economy might be in a recession after recording negative growth for two consecutive quarters.
European economies are also facing many difficulties and the region’s economic outlook is relatively grim due to rising inflation and the Russia-Ukraine conflict remaining complicated.
In the past few weeks, worry over economic downturn has been growing in Germany, Europe’s largest economy. Government data showed German economy in the second quarter grew by 0.1% against the previous quarter, slightly higher than a previous projection of zero percent. But the Russia-Ukraine tension is compounding current difficulties with disrupted supply chains and rising prices, according to German statistics agency Destatis.
In China, the second largest economy in the world, economic growth has also slowed in recent months. Latest data from the National Bureau of Statistics showed that the Chinese economy in the second quarter shrank 2.6% against the previous quarter, while growth in the first half of the year reached 2.5%. The World Bank has predicted that China’s growth will slow to 4.3% this year, 0.8 percentage point lower than a projection made last December.
The Japanese economy is also losing momentum and will face a great deal of difficulties in the future. Japan’s Cabinet Office announced that the country’s GDP expanded 2.2% in the second quarter, much lower than the market’s expectations. According to Japanese media, consumer spending still grew at a slow pace in the second quarter without recovering as expected.
A survey by the Japanese Ministry of Internal Affairs and Communications shows that the actual income of a household in the second quarter fell 2% from a year ago, while actual household spending fell 0.7%. Economists have warned that Japan’s economic and security policies may create headwinds for the Japanese economy in the future by raising the burden on enterprises. Amid the bleak outlook of the world’s third largest economy, the Japanese Cabinet Office has recently downgraded its economic growth forecast for fiscal 2022 from 3.2% to 2%.
The downturn of major economies, especially the US, is causing concerns for the global economy. Analysts said that the risk of the US economy falling into recession may worsen the growth environment for the global economy. The International Monetary Fund has cut its growth forecast for the global economy down to 3.2% as the US economy’s rapid cooling will affect the global economy.
The above situation requires governments to introduce new economic stimulus packages and countries to work together more closely to cope with inflation, the coronavirus pandemic, and the shared challenges facing the world economy.
