Executives raise global growth alarm on risks from China to UK

  • Business
  • Monday, 28 Jan 2019

Basel said in a statement that its oversight body, the Governors and Head of Supervision, chaired by European Central Bank President Mario Draghi(pic), endorsed the revisions on Monday.

HONG KONG: Corporate executives are increasingly nervous about the global economic outlook as they see threats multiplying from China to trade to Brexit.

While few see recession looming, louder warnings from semiconductors to logistics signal that waning confidence among businesses and consumers is sapping activity. The more downbeat mood was underscored by US power-tool maker Stanley Black & Decker Inc, which plunged after saying profit will miss estimates and warning about a global slowdown.

Concerns are rising as investors, bankers and former policy makers at the World Economic Forum in Davos, Switzerland, said the expansion is weakening. Under a deluge of disappointing numbers, European Central Bank president Mario Draghi said risks to the eurozone outlook have moved to the downside, a key acknowledgment of the changed backdrop.

It’s a cause for concern, particularly given the slowdown in the world’s second-biggest economy. China said on Monday that gross domestic product grew 6.6% last year, the slowest pace since 1990, creating a lack of demand that’s cascading down supply chains in the technology and automotive industries. Economists expect further deceleration through 2020.

The mood darkened as the International Monetary Fund cut its global growth forecasts and a survey found 30% of business leaders expect growth to weaken, about six times more than a year ago.

Much of the uncertainty is pinned on the ongoing trade tensions between the United States and China as both sides negotiate for a deal ahead of a March 1 deadline, after which President Donald Trump has threatened an escalation of tariffs on Chinese goods.

Trinseo SA, a US producer of synthetic rubber for tyres, plunged after warning that slowing auto demand in China had reduced fourth-quarter earnings, while Nidec Corp, the Japanese maker of micro-motors used in hard drives and other electronic devices, said third-quarter profit fell and cited the slowing Chinese economy for weighing on some segments.

Apple Inc’s main chipmaker Taiwan Semiconductor Manu-facturing Co forecast the worst revenue growth in at least a decade. In Europe, Apple chip supplier STMicroelectronics NV this week forecast a drop in sales in the first part of the year, though expects a return to growth further out. Taiwan’s Foxconn Technology Group, the biggest iPhone assembler, says it may slow the pace of hiring at its US$10bil manufacturing facility in Wisconsin.

But China and trade aren’t the only concerns. Germany’s huge manufacturing sector is faltering, and uncertainty about Brexit is continuing to weigh on UK firms. Airbus SE is the latest company to warn of the damage a no-deal split from the European Union could do. — Bloomberg


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Economy , growth , global , alarm , China , Draghi , European Union , GDP , recession ,


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