Indian economy is facing a tough time but it seems we are at the end of it and dawn is approaching.&nbsp;

For the October-December quarter, GDP grew at 4.7 per cent in line with expectations of various estimates while the growth rate for the September quarter was revised up to 5.1 per cent.&nbsp;

At the same time, industrial production of 8 core sectors grew for the second month in January while growth in the core sectors for the month of December was also revised up from 1.3 to 2.1 per cent. Before that, it showed that there was a contraction for 4 months. Manufacturing PMI for the month of January also showed sharp uptick when it grew from 52.7 to 55.3. While other high-frequency indicators like passenger vehicle sales, rail freight traffic are giving mixed signals. Inflation has reached 7.59 per cent but that seemed to be due to perishable goods and is expected to come down.&nbsp;

The government has breached its fiscal deficit target, but looking at improvement in the core sector, it seems to be paying off.&nbsp;

Although a few green shoots are emerging which are trying hard to sustain, but before we dive into that, let’s take a look at what led to the slowdown.&nbsp;

Story of a current slowdown began with the delayed recognition of the twin balance sheet. It basically meant that companies were not profitable so they were unable to pay back their loans and since banks did not receive the previous loans they were unable to lend more money.

Due to this investment started deaccelerating at a time when the Indian economy was growing rapidly and a high rate of investment was required to maintain it. At the same time, the central bank increased the interest rates, following which inflation fell quite quickly.

Now high-interest rates, coupled with low inflation, led to the high real rate of interest which further dented the investments. This, in turn, impacted the job and wage growth rate.&nbsp;

All this happened in the labour-intensive sector, so a large number of people were affected which translated into a lower level of consumption, while rural consumption also fell due to the problem of uneven monsoon.&nbsp;

Since businesses were already under pressure, this fall in consumption had a multiplier effect which led to a bigger fall in investments and more downsizing by firms. For example, in the FMCG sector - the sales growth in rural areas is generally more than urban counterpart but last year it fell to almost half.&nbsp;

Due to a tight balance sheet of banks, NBFC sector (Non-Banking Finance Company) emerged into prominence and its lending increased, specifically for high ticket items like cars and homes. Also, NBFCs give a huge amount of loan to the unorganised sector. But shadow banks also took a hit after ILFS fiasco as lenders’ trust on NBFCs dented.&nbsp;

Now the global economy was also facing headwinds due to geopolitical tensions in the form of a trade war and Brexit but in most of the developed countries, the labour market was quite strong and that supported consumption. Since India's consumption also took a hit, we saw a sharp fall in the Indian growth rate as compared to the rest of the world.&nbsp;

Not to forget, the fall in investments affected the competitiveness and productivity of Indian firms at a global level (potentially), and this along with global slowdown dented the exports.&nbsp;

Government is in full fledge mode to revive growth, it has reduced corporate tax, changed personal income tax structure, set up infrastructure fund of Rs 105 lakh crore, while also coming up with various sector-specific measures. Although the government's earnings are facing stress due to low tax collection and delay in the divestment process, but right now it is more concerned about growth.

So if the economy is revived, even though the fiscal deficit target is breached, the long term fiscal consolidation target will also be achieved.

Reserve Bank of India (RBI) is also showing up its ammunition in the fight against slowdown, as it reduced the repo rate by 135 basis point.&nbsp;

And when inflation constrained it from reducing the rate further, the RBI came up with other measures like operation twist (buying long term bonds and selling short term bonds to reduce long term interest rates), easing CRR norms on incremental loans to boost lending for MSME, automobile and residential sector.&nbsp;

Furthermore, the central bank conducted long term repo operation, so banks can get money at cheaper rates and also linked more loans to external benchmarks like repo rates.&nbsp;

Although RBI reduced rates by 135 basis points, banks have not completely transmitted them because of which their profitability has improved, also the previous NPAs are being resolved.

And quality shadow banks (High-grade NBFCs) are also emerging stronger as their borrowing cost has reduced.&nbsp;

Still, there are few headwinds like telecom sector and now the coronavirus is a googly which took everyone by surprise.&nbsp;

Coronavirus has disrupted the supply chain and has impacted both the manufacturing and the service sector. The virus is spreading across the world and it can become a pandemic, which can cause a global recession. On the global front, fear of recession is quite high as indicated by a sharp fall in financial markets.&nbsp;

The current slowdown is basically a result of the policy - prevention is better than cure as business activities are being shut off to contain virus outbreak while previously it was more like a cure after the damage.

Economic fundamentals, like job market and consumption, are still strong so if the virus is contained soon, then sharp recovery can be expected in sentiment.&nbsp;

In the current scenario, the high-frequency indicator will have a favourable base effect which might give a further boost to the sentiment.&nbsp;

Also, an incident like this brings countries closer and to revive the global economy from something like this, a collaborated action can be required which would lead to countries shifting from protectionism to a more open economy.&nbsp;

This would boost exports growth in India while attracting foreign money in the form of both FPI and FDI.&nbsp; 
 
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp;

Indian economy is facing a tough time but it seems we are at the end of it and dawn is approaching. For the October-December quarter, GDP grew at 4.7 per cent in line with expectations of various estimates while the growth rate for the September quarter was revised up to 5.

Indian economy is facing a tough time but it seems we are at the end of it and dawn is approaching. For the October-December quarter, GDP grew at 4.7 per cent in line with expectations of various estimates while the growth rate for the September quarter was revised up to 5.1 per cent. At the same time, industrial production of 8 core sectors grew for the second month in January while growth in the core sectors for the month of December was also revised up from 1.3 to 2.1 per cent. Before that, it showed that there was a contraction for 4 months. Manufacturing PMI for the month of January also showed sharp uptick when it grew from 52.7 to 55.3. While other high-frequency indicators like passenger vehicle sales, rail freight traffic are giving mixed signals. Inflation has reached 7.59 per cent but that seemed to be due to perishable goods and is expected to come down. The government has breached its fiscal deficit target, but looking at improvement in the core sector, it seems to be paying off. Although a few green shoots are emerging which are trying hard to sustain, but before we dive into that, let’s take a look at what led to the slowdown. Story of a current slowdown began with the delayed recognition of the twin balance sheet. It basically meant that companies were not profitable so they were unable to pay back their loans and since banks did not receive the previous loans they were unable to lend more money. Due to this investment started deaccelerating at a time when the Indian economy was growing rapidly and a high rate of investment was required to maintain it. At the same time, the central bank increased the interest rates, following which inflation fell quite quickly. Now high-interest rates, coupled with low inflation, led to the high real rate of interest which further dented the investments. This, in turn, impacted the job and wage growth rate. All this happened in the labour-intensive sector, so a large number of people were affected which translated into a lower level of consumption, while rural consumption also fell due to the problem of uneven monsoon. Since businesses were already under pressure, this fall in consumption had a multiplier effect which led to a bigger fall in investments and more downsizing by firms. For example, in the FMCG sector - the sales growth in rural areas is generally more than urban counterpart but last year it fell to almost half. Due to a tight balance sheet of banks, NBFC sector (Non-Banking Finance Company) emerged into prominence and its lending increased, specifically for high ticket items like cars and homes. Also, NBFCs give a huge amount of loan to the unorganised sector. But shadow banks also took a hit after ILFS fiasco as lenders’ trust on NBFCs dented. Now the global economy was also facing headwinds due to geopolitical tensions in the form of a trade war and Brexit but in most of the developed countries, the labour market was quite strong and that supported consumption. Since India's consumption also took a hit, we saw a sharp fall in the Indian growth rate as compared to the rest of the world. Not to forget, the fall in investments affected the competitiveness and productivity of Indian firms at a global level (potentially), and this along with global slowdown dented the exports. Government is in full fledge mode to revive growth, it has reduced corporate tax, changed personal income tax structure, set up infrastructure fund of Rs 105 lakh crore, while also coming up with various sector-specific measures. Although the government's earnings are facing stress due to low tax collection and delay in the divestment process, but right now it is more concerned about growth. So if the economy is revived, even though the fiscal deficit target is breached, the long term fiscal consolidation target will also be achieved. Reserve Bank of India (RBI) is also showing up its ammunition in the fight against slowdown, as it reduced the repo rate by 135 basis point. And when inflation constrained it from reducing the rate further, the RBI came up with other measures like operation twist (buying long term bonds and selling short term bonds to reduce long term interest rates), easing CRR norms on incremental loans to boost lending for MSME, automobile and residential sector. Furthermore, the central bank conducted long term repo operation, so banks can get money at cheaper rates and also linked more loans to external benchmarks like repo rates. Although RBI reduced rates by 135 basis points, banks have not completely transmitted them because of which their profitability has improved, also the previous NPAs are being resolved. And quality shadow banks (High-grade NBFCs) are also emerging stronger as their borrowing cost has reduced. Still, there are few headwinds like telecom sector and now the coronavirus is a googly which took everyone by surprise. Coronavirus has disrupted the supply chain and has impacted both the manufacturing and the service sector. The virus is spreading across the world and it can become a pandemic, which can cause a global recession. On the global front, fear of recession is quite high as indicated by a sharp fall in financial markets. The current slowdown is basically a result of the policy - prevention is better than cure as business activities are being shut off to contain virus outbreak while previously it was more like a cure after the damage. Economic fundamentals, like job market and consumption, are still strong so if the virus is contained soon, then sharp recovery can be expected in sentiment. In the current scenario, the high-frequency indicator will have a favourable base effect which might give a further boost to the sentiment. Also, an incident like this brings countries closer and to revive the global economy from something like this, a collaborated action can be required which would lead to countries shifting from protectionism to a more open economy. This would boost exports growth in India while attracting foreign money in the form of both FPI and FDI. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

How this economic slowdown is different from the previous ones

Wall Street stocks crashed for a second day on Friday down nearly 1,000 points, diving 3.8 per cent in early trade sinking 11 per cent in the last two days as the coronavirus affected world <a href="https://www.wionews.com/business-economy/sensex-nifty-crash-as-global-markets-dive-over-spread-of-coronavirus-283314">markets</a>.

<a href="https://www.wionews.com/business-economy/oil-prices-crash-4-over-spread-of-coronavirus-on-track-for-biggest-weekly-drop-in-over-4-years-283318">Also Read: Oil prices crash 4% over spread of coronavirus</a>

Global stocks slumped to a new low on Friday to mark the largest weekly drop since the 2008 global financial crisis.&nbsp;

Watch Video:

<div class="videoWrapper trancodeVideo"><iframe allowfullscreen="" autoplay="1" class="includeVideo" frameborder="0" height="350" src="http://13.235.153.162/videos/gravitas-wuhan-coronavirus-markets-crash-283412/embed" style="width:100%;max-width:560px;" width="560"></iframe></div>

Iran on Friday reported eight new deaths from the coronavirus taking the death toll in the country to 34 with 143 cases detected in the last 24 hours.

Pakistan suspended all flights to Iran and closed land borders with its neighbour after coronavirus was confirmed in two cases.

In Italy, at least four people died of the virus taking the death toll to 21 in the country as the disease continued to spread worldwide.

<a href="https://www.wionews.com/world/who-raises-global-risk-of-coronavirus-from-high-to-very-high-283411">WHO</a> chief Tedros Adhanom Ghebreyesus said: "Our epidemiologists have been monitoring these developments continuously. We have now increased our assessment of the risk of spread and the risk of impact of COVID-19 to 'very high' at the global level."

In Germany, at least 1,000 people were in quarantine in the district of Heinsberg in North Rhine-Westphalia with schools shut and people asked to stay at home.

Health Minister Jens Spahn warned that Germany was "at the beginning of a coronavirus epidemic".

The Mexican government said it had detected the first cases of coronavirus infection in two men who had recently travelled to Italy, making it the second country in Latin America after Brazil.

As a result, Mexico's main stock index suffered one of its biggest falls in months, tumbling more than 4% in morning trading, and the currency peso fell by more than 1 per cent against the dollar.

In China where the virus originated 329 new cases were reported on Friday. The virus has now killed 2,856 people and infected more than 83,000 worldwide.

Wall Street stocks crashed for a second day on Friday down nearly 1,000 points, diving 3.8 per cent in early trade sinking 11 per cent in the last two days as the coronavirus affected world markets.

Wall Street stocks crashed for a second day on Friday down nearly 1,000 points, diving 3.8 per cent in early trade sinking 11 per cent in the last two days as the coronavirus affected world markets. Also Read: Oil prices crash 4% over spread of coronavirus Global stocks slumped to a new low on Friday to mark the largest weekly drop since the 2008 global financial crisis. Watch Video: Iran on Friday reported eight new deaths from the coronavirus taking the death toll in the country to 34 with 143 cases detected in the last 24 hours. Pakistan suspended all flights to Iran and closed land borders with its neighbour after coronavirus was confirmed in two cases. In Italy, at least four people died of the virus taking the death toll to 21 in the country as the disease continued to spread worldwide. WHO chief Tedros Adhanom Ghebreyesus said: "Our epidemiologists have been monitoring these developments continuously. We have now increased our assessment of the risk of spread and the risk of impact of COVID-19 to 'very high' at the global level." In Germany, at least 1,000 people were in quarantine in the district of Heinsberg in North Rhine-Westphalia with schools shut and people asked to stay at home. Health Minister Jens Spahn warned that Germany was "at the beginning of a coronavirus epidemic". The Mexican government said it had detected the first cases of coronavirus infection in two men who had recently travelled to Italy, making it the second country in Latin America after Brazil. As a result, Mexico's main stock index suffered one of its biggest falls in months, tumbling more than 4% in morning trading, and the currency peso fell by more than 1 per cent against the dollar. In China where the virus originated 329 new cases were reported on Friday. The virus has now killed 2,856 people and infected more than 83,000 worldwide.

Global stocks record worst drop since 2008 recession as coronavirus spreads worldwide

Japan registers worst slump in 5 years. where its economy hit by low consumer spending. Japan is currently facing a recession due to many occurring circumstances that have caused Japan's economy to slowly spiral down.

Japan's Economy shrank sharply | Wion News | World News

Finance Minister Nirmala Sitharaman on Wednesday admitted that growth may have come down but said it is not a recession yet.

She added that it will never be a recession ever in the country. In her address to Rajya Sabha, she said that India's real Gross Domestic Product (GDP) growth was at 6.4 per cent at the end of 2009-2014, whereas between 2014-2019 it was at 7.5 per cent.

Sitharaman said, "India's real Gross Domestic Product (GDP) growth was at 6.4 per cent at the end of 2009-2014, whereas between 2014-2019 it was at 7.5 per cent.

"The headline inflation in 2014 was 10.3 and in 2019 when the National Democratic Alliance (NDA) government concluded it was 4.5 only. The core inflation in 2014 was 9.4 and in 2019 was 5.1 only. The food inflation at 2014 was 11.2 and in 2019 just 3.5 only," she said.

"If you are looking at the economy with a discerning view, you see that growth may have come down but it is not a recession yet, it will not be a recession ever," she added.

Opposition MPs, however, walked out of Rajya Sabha during the Finance Minister's reply on the economic situation of the country.&nbsp;

Finance Minister Nirmala Sitharaman on Wednesday admitted that growth may have come down but said it is not a recession yet. She added that it will never be a recession ever in the country.

Finance Minister Nirmala Sitharaman on Wednesday admitted that growth may have come down but said it is not a recession yet. She added that it will never be a recession ever in the country. In her address to Rajya Sabha, she said that India's real Gross Domestic Product (GDP) growth was at 6.4 per cent at the end of 2009-2014, whereas between 2014-2019 it was at 7.5 per cent. Sitharaman said, "India's real Gross Domestic Product (GDP) growth was at 6.4 per cent at the end of 2009-2014, whereas between 2014-2019 it was at 7.5 per cent. "The headline inflation in 2014 was 10.3 and in 2019 when the National Democratic Alliance (NDA) government concluded it was 4.5 only. The core inflation in 2014 was 9.4 and in 2019 was 5.1 only. The food inflation at 2014 was 11.2 and in 2019 just 3.5 only," she said. "If you are looking at the economy with a discerning view, you see that growth may have come down but it is not a recession yet, it will not be a recession ever," she added. Opposition MPs, however, walked out of Rajya Sabha during the Finance Minister's reply on the economic situation of the country.

Growth may have come down but there isn't any recession: Sitharaman

<a href="https://www.wionews.com/world/thousands-in-hong-kong-defy-chinas-xi-with-pro-democracy-rallies-262298">Hong&nbsp;Kong</a>&nbsp;confirmed on Friday its economy plunged into its first recession in a decade in the third quarter, weighed down by increasingly violent anti-government protests and the escalating US-China trade war.

The economy shrank by a seasonally adjusted 3.2 per cent&nbsp;in July-September from the previous quarter, in line with a preliminary reading, revised government data showed. Gross domestic product (GDP) contracted for the second consecutive quarter, meeting the technical definition of a recession.

From a year earlier, the economy contracted 2.9 per cent, the same as the preliminary drop. The readings were the weakest since the global financial crisis in 2008/2009.

Months of confrontation between police and protesters have plunged the financial and trading hub into its worst crisis since it reverted from British to <a href="https://www.wionews.com/world/china-condemns-attack-on-hong-kong-official-in-london-asks-local-police-to-continue-investigation-262218">Chinese rule</a> in 1997.

Tourists are cancelling bookings, retailers are reeling from a sharp drop in sales and the stock market is faltering, adding to pressure the city is feeling from China's economic slowdown and the prolonged Sino-US&nbsp;trade dispute.

Hong Kong confirmed on Friday its economy plunged into its first recession in a decade in the third quarter, weighed down by increasingly violent anti-government protests and the escalating US-China trade war.

Hong Kong confirmed on Friday its economy plunged into its first recession in a decade in the third quarter, weighed down by increasingly violent anti-government protests and the escalating US-China trade war. The economy shrank by a seasonally adjusted 3.2 per cent in July-September from the previous quarter, in line with a preliminary reading, revised government data showed. Gross domestic product (GDP) contracted for the second consecutive quarter, meeting the technical definition of a recession. From a year earlier, the economy contracted 2.9 per cent, the same as the preliminary drop. The readings were the weakest since the global financial crisis in 2008/2009. Months of confrontation between police and protesters have plunged the financial and trading hub into its worst crisis since it reverted from British to Chinese rule in 1997. Tourists are cancelling bookings, retailers are reeling from a sharp drop in sales and the stock market is faltering, adding to pressure the city is feeling from China's economic slowdown and the prolonged Sino-US trade dispute.

Hong Kong third-quarter GDP shrinks 3.2%, confirms depth of recession

The World Bank urged protest-hit Lebanon on Wednesday to form a new government quickly, warning that an economic downturn would deepen poverty and worsen unemployment.

Students boycotted classes during the day and anti-government demonstrations continued into the evening.

Since October 17, an unprecedented protest movement has targeted a political class deemed incompetent and corrupt. Demonstrations have continued despite the government's resignation last week.

The outgoing cabinet is serving in a caretaker capacity as leaders haggle over the make-up of the next government -- a delay donors say the debt-saddled country can ill afford.

The World Bank warned Wednesday that a "rapid government formation that meets the expectations of all Lebanese people is the most urgent step".

Representatives from the Washington-based global lender met earlier with embattled President Michel Aoun, who has pledged various reforms to combat corruption following the protests.

The World Bank had forecast a contraction of 0.2 percent before the turmoil, but said Wednesday that it now expected Lebanon's recession "to be even more significant".

Without quick steps to address the crisis, about half of Lebanon's population could fall into poverty and unemployment could "rise sharply", the lender said in a statement.

"With every passing day, the situation is becoming more acute," World Bank regional director Saroj Kumar Jha warned.

Corruption

Even before protests erupted last month, growth in Lebanon had stalled following repeated political deadlocks in recent years, compounded by the war in Syria.

Public debt stood at more than $86 billion, or higher than 150 percent of Gross Domestic Product, according to the finance ministry.

Moody's ratings agency on Tuesday downgraded Lebanon's sovereign debt, saying the anti-government protests had hit investor confidence and threatened macroeconomic stability.

Petrol stations owners said they would meet Thursday over persistent difficulties in paying for hydrocarbon imports due to dollar shortages.

A long list of grievances have spurred exasperated Lebanese to protest, but poor living conditions and corruption are near the top.

On Wednesday, the financial prosecutor asked former premier Fouad Siniora to appear next week over $11 billion allegedly spent between 2006 and 2008 when he was in office, the state-run National News Agency reported.

Siniora denied the accusations.

Last month, another prosecutor pressed charges against former prime minister Najib Mikati over allegations he wrongly received millions of dollars in subsidised housing loans, charges he denies.

Lebanon is ranked 138th out of 175 countries in Transparency International's 2018 corruption perceptions index, with key sectarian leaders accused of running demi-fiefdoms.

After meeting the World Bank on Wednesday, Aoun said no suspect would be exempt from investigations into corruption involving current and former officials.

He said 17 such cases have already been referred for investigation.

"The next government will include competent ministers, who are not suspected of corruption," Aoun said on Twitter, seemingly endorsing the demands of protesters.&nbsp;

'Women's rights not a footnote'

Banks opened again on Wednesday and classes resumed at many schools after a two-week gap, as demonstrators protested in various ways.

On Wednesday evening, thousands of women gathered in a central Beirut square near the seat of government, carrying candles as some banged on saucepans, an AFP correspondent said.

"O patriarchal powers, women's rights are not a footnote," they chanted.

On the Beirut waterfront, security forces and activists clashed after protesters tried to enter a private seaside resort, denouncing what they say is illegal privatisation of public property.

Earlier near the Palace of Justice, hundreds demanded an independent judiciary free from political interference, another AFP correspondent reported.&nbsp;

"We don't want judges who receive orders," read one protester's placard.

Across the country, hundreds of students skipped school, refusing to return to class until protest demands are met.

On pupil in Beirut asked Lebanese TV: "What will I do with a school-leaver's certificate if I don't have a country?"&nbsp;

Economist Nassib Ghobril said protesters' demands were aligned with those of international donors, especially in terms of the "fight against corruption" and achieving "good governance and financial rehabilitation".

"Today, there is an opportunity to see real change," he said.&nbsp;

The World Bank urged protest-hit Lebanon on Wednesday to form a new government quickly, warning that an economic downturn would deepen poverty and worsen unemployment.

The World Bank urged protest-hit Lebanon on Wednesday to form a new government quickly, warning that an economic downturn would deepen poverty and worsen unemployment. Students boycotted classes during the day and anti-government demonstrations continued into the evening. Since October 17, an unprecedented protest movement has targeted a political class deemed incompetent and corrupt. Demonstrations have continued despite the government's resignation last week. The outgoing cabinet is serving in a caretaker capacity as leaders haggle over the make-up of the next government -- a delay donors say the debt-saddled country can ill afford. The World Bank warned Wednesday that a "rapid government formation that meets the expectations of all Lebanese people is the most urgent step". Representatives from the Washington-based global lender met earlier with embattled President Michel Aoun, who has pledged various reforms to combat corruption following the protests. The World Bank had forecast a contraction of 0.2 percent before the turmoil, but said Wednesday that it now expected Lebanon's recession "to be even more significant". Without quick steps to address the crisis, about half of Lebanon's population could fall into poverty and unemployment could "rise sharply", the lender said in a statement. "With every passing day, the situation is becoming more acute," World Bank regional director Saroj Kumar Jha warned. Corruption Even before protests erupted last month, growth in Lebanon had stalled following repeated political deadlocks in recent years, compounded by the war in Syria. Public debt stood at more than $86 billion, or higher than 150 percent of Gross Domestic Product, according to the finance ministry. Moody's ratings agency on Tuesday downgraded Lebanon's sovereign debt, saying the anti-government protests had hit investor confidence and threatened macroeconomic stability. Petrol stations owners said they would meet Thursday over persistent difficulties in paying for hydrocarbon imports due to dollar shortages. A long list of grievances have spurred exasperated Lebanese to protest, but poor living conditions and corruption are near the top. On Wednesday, the financial prosecutor asked former premier Fouad Siniora to appear next week over $11 billion allegedly spent between 2006 and 2008 when he was in office, the state-run National News Agency reported. Siniora denied the accusations. Last month, another prosecutor pressed charges against former prime minister Najib Mikati over allegations he wrongly received millions of dollars in subsidised housing loans, charges he denies. Lebanon is ranked 138th out of 175 countries in Transparency International's 2018 corruption perceptions index, with key sectarian leaders accused of running demi-fiefdoms. After meeting the World Bank on Wednesday, Aoun said no suspect would be exempt from investigations into corruption involving current and former officials. He said 17 such cases have already been referred for investigation. "The next government will include competent ministers, who are not suspected of corruption," Aoun said on Twitter, seemingly endorsing the demands of protesters. 'Women's rights not a footnote' Banks opened again on Wednesday and classes resumed at many schools after a two-week gap, as demonstrators protested in various ways. On Wednesday evening, thousands of women gathered in a central Beirut square near the seat of government, carrying candles as some banged on saucepans, an AFP correspondent said. "O patriarchal powers, women's rights are not a footnote," they chanted. On the Beirut waterfront, security forces and activists clashed after protesters tried to enter a private seaside resort, denouncing what they say is illegal privatisation of public property. Earlier near the Palace of Justice, hundreds demanded an independent judiciary free from political interference, another AFP correspondent reported. "We don't want judges who receive orders," read one protester's placard. Across the country, hundreds of students skipped school, refusing to return to class until protest demands are met. On pupil in Beirut asked Lebanese TV: "What will I do with a school-leaver's certificate if I don't have a country?" Economist Nassib Ghobril said protesters' demands were aligned with those of international donors, especially in terms of the "fight against corruption" and achieving "good governance and financial rehabilitation". "Today, there is an opportunity to see real change," he said.

World Bank urges Lebanon to form government, warns of recession

The recent truce in the <a href="https://www.wionews.com/business-economy/oil-rises-on-hopes-for-deeper-opec-output-cuts-us-china-trade-talks-255148">US-China trade war</a> is not an economic turning point and has done nothing to reduce a significant risk that the <a href="https://www.wionews.com/world/donald-trump-says-warmer-feelings-in-us-china-trade-talks-255346">United States</a> could slip into recession in the next two years, a Reuters poll of economists found.&nbsp;

Collateral damage from the trade conflict between the world’s two largest economies has hit financial markets and forced most major central banks to cut interest rates this year.

The October 18-23 Reuters poll of more than 100 economists found growth and inflation views for the coming year and beyond barely changed, despite a White House announcement about a “phase 1” deal with China and suspension of tariffs scheduled to kick in this month.

“US-China trade negotiations over the past 18 months have been a classic case of ‘one step forward, several steps back’. Despite recent encouraging noise on trade talks, there are more tariffs in place than three months ago,” noted Ajay Rajadhyaksha, head of macro research at Barclays in New York.

“Our forecasts suggest that below-trend US&nbsp;growth will persist for much of 2020. We still feel that the U.S. and the world economy will avoid recession in the coming months, but the US&nbsp;will not be a global locomotive, as it was in 2018.”

The median probability of a US&nbsp;recession in the next 12 months rose to 35% from 30% predicted a month ago - the highest percentage in this economic expansion. For the next two years, it held at a high 45%.&nbsp;

In response to an additional question, 75% of economists said the recent trade development between Washington and Beijing was not a turning point in easing uncertainty.

That conclusion was evident in the consensus for U.S. economic growth, which is expected to slow to 1.6%-1.7% on an annualized basis each quarter between now and end-2020, down from 2.0% last reported.&nbsp;

The range of growth forecasts for the second half of this year showed lower highs and lower lows, underscoring fears the U.S. economy is still losing momentum after a short sugar rush from aggressive tax cuts passed in late 2017.

A majority of economists, 27 of 45, also said US-China trade relations would stay about the same between now and the end of next year. The others were evenly split between it getting better or worse.

“Encouraging, but we are mindful a successful resolution is still a long way away and the negotiations will continue to ebb and flow over the coming year,” said Sam Bullard, senior economist at Wells Fargo, referring to the latest US-China trade developments.

Even with record low unemployment, the Federal Reserve was expected to cut rates at its October&nbsp;29-30 meeting, its third cut this year.

The Fed’s preferred gauge of inflation, the core personal consumption expenditure (PCE) price index, was expected to touch its target of 2% early next year and stay around that rate through end-2020 at least.

After lowering interest rates in July and September, the central bank was expected to cut again by 25 basis points next week, taking the fed funds rate to 1.50%-1.75%.

Another cut is forecast for early next year, taking the rate to 1.25%-1.50%, with no more changes expected for the rest of 2020.&nbsp;

Those forecasts are in line with interest rate futures market pricing.&nbsp;

In addition to rate cuts, a few economists expect some form of fiscal stimulus next year.

“A likely third Fed rate cut in October and some modest fiscal support next year won’t prevent the U.S. economy from slowing further, though the stimulus should offset growing friction from trade protectionism to extend the record-long expansion,” said Sal Guatieri, senior economist at BMO Capital Markets.

The recent truce in the US-China trade war is not an economic turning point and has done nothing to reduce a significant risk that the United States could slip into recession in the next two years, a Reuters poll of economists found.

The recent truce in the US-China trade war is not an economic turning point and has done nothing to reduce a significant risk that the United States could slip into recession in the next two years, a Reuters poll of economists found. Collateral damage from the trade conflict between the world’s two largest economies has hit financial markets and forced most major central banks to cut interest rates this year. The October 18-23 Reuters poll of more than 100 economists found growth and inflation views for the coming year and beyond barely changed, despite a White House announcement about a “phase 1” deal with China and suspension of tariffs scheduled to kick in this month. “US-China trade negotiations over the past 18 months have been a classic case of ‘one step forward, several steps back’. Despite recent encouraging noise on trade talks, there are more tariffs in place than three months ago,” noted Ajay Rajadhyaksha, head of macro research at Barclays in New York. “Our forecasts suggest that below-trend US growth will persist for much of 2020. We still feel that the U.S. and the world economy will avoid recession in the coming months, but the US will not be a global locomotive, as it was in 2018.” The median probability of a US recession in the next 12 months rose to 35% from 30% predicted a month ago - the highest percentage in this economic expansion. For the next two years, it held at a high 45%. In response to an additional question, 75% of economists said the recent trade development between Washington and Beijing was not a turning point in easing uncertainty. That conclusion was evident in the consensus for U.S. economic growth, which is expected to slow to 1.6%-1.7% on an annualized basis each quarter between now and end-2020, down from 2.0% last reported. The range of growth forecasts for the second half of this year showed lower highs and lower lows, underscoring fears the U.S. economy is still losing momentum after a short sugar rush from aggressive tax cuts passed in late 2017. A majority of economists, 27 of 45, also said US-China trade relations would stay about the same between now and the end of next year. The others were evenly split between it getting better or worse. “Encouraging, but we are mindful a successful resolution is still a long way away and the negotiations will continue to ebb and flow over the coming year,” said Sam Bullard, senior economist at Wells Fargo, referring to the latest US-China trade developments. Even with record low unemployment, the Federal Reserve was expected to cut rates at its October 29-30 meeting, its third cut this year. The Fed’s preferred gauge of inflation, the core personal consumption expenditure (PCE) price index, was expected to touch its target of 2% early next year and stay around that rate through end-2020 at least. After lowering interest rates in July and September, the central bank was expected to cut again by 25 basis points next week, taking the fed funds rate to 1.50%-1.75%. Another cut is forecast for early next year, taking the rate to 1.25%-1.50%, with no more changes expected for the rest of 2020. Those forecasts are in line with interest rate futures market pricing. In addition to rate cuts, a few economists expect some form of fiscal stimulus next year. “A likely third Fed rate cut in October and some modest fiscal support next year won’t prevent the U.S. economy from slowing further, though the stimulus should offset growing friction from trade protectionism to extend the record-long expansion,” said Sal Guatieri, senior economist at BMO Capital Markets.

US-China trade reprieve brings no refuge from recession risk: Report

The <a href="https://www.wionews.com/business-economy/uk-economy-starts-to-shows-cracks-under-brexit-and-global-strains-254409">world economy </a>is slowing to its weakest pace since the global <a href="https://www.wionews.com/opinions/us-china-trade-war-points-to-the-real-crisis-that-global-leaders-must-confront-at-g20-summit-231112">financial crisis</a>, amid continuing trade conflicts that have <a href="https://www.wionews.com/world/global-growth-fragile-under-threat-former-imf-head-christine-lagarde-250693">undercut business confidence</a> and investment, the IMF said Tuesday.

It warned that the outlook is beset by risks, and urged policymakers to work to find resolutions to trade disputes since there are limited tools to respond to a new crisis.

"With a synchronized slowdown and uncertain recovery, the global outlook remains precarious," International Monetary Fund chief economist Gita Gopinath said in her introduction to the latest forecasts.

The IMF for the past year has every three months cut projected growth for 2019 as trade conflicts worsened.

In its latest World Economic Outlook, it trimmed the estimate by another two-tenths, to 3.0 per cent. The report also lowered the 2020 forecast by a tenth to 3.4 per cent.&nbsp;

"At three per cent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively deescalate trade and geopolitical tensions," Gopinath said.

In addition, the trade conflicts and a slowdown in auto sales worldwide means trade growth has slowed sharply, falling in the first half of the year to its weakest since 2012, with an estimated increase of just 1.1 per cent this year after a 3.6 per cent jump in 2018.

Running low on ammo

While the US economy also has been hit by uncertainty — largely created by President Donald Trump's trade offensive — the world's largest economy remains a bright spot on the global stage, the report said.

After upgrading its US outlook in July, the latest WEO reversed course and cutting the US forecast this year to 2.4 per cent — still above trend, but two-tenths below the July forecast.

In 2020, the IMF projects US GDP to expand by 2.1 per cent, unchanged from the prior report.

"For the United States, trade-related uncertainty has had negative effects on investment, but employment and consumption continue to be robust, buoyed also by policy stimulus," Gopinath said.

Major central banks have taken steps to soften the blow to growth by lowering interest rates, without which the downturn would have been worse, she said.&nbsp;

However, she cautioned that monetary policy "cannot be the only game in town" and governments, notably in countries like Germany, should take advantage of low rates to make investments to support growth.

"With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot," Gopinath warned.

The US-China trade war alone is estimated to shrink the world economy by 0.8 per cent in 2020, the IMF said.

The fund warned that risks to the outlook predominate, and the uncertainty around trade policy -- which causes businesses to hold off on investments and undermines confidence — will take a larger chunk out of growth than the tariffs themselves

Slowing auto sales

"To forestall such an outcome, policies should decisively aim at defusing trade tensions, reinvigorating multilateral cooperation, and providing timely support to an economic activity where needed," the report said.

But trade is not the only reason for the global slowdown: the report notes that in China's economy, for example, growth is moderating as intended amid slowing domestic demand.

Other major economies like Brazil, India, Mexico, Russia and South Africa are slowing this year due to "idiosyncratic reasons" but are expected to recover in 2020.

"A notable feature of the sluggish growth in 2019 is the sharp and geographically broad-based slowdown in manufacturing and global trade," the IMF said, which in addition to the higher tariffs and trade uncertainty is the result of the contracting auto industry.&nbsp;

That slowdown has had an impact in Germany, China and India, the report said.

The world economy is slowing to its weakest pace since the global financial crisis, amid continuing trade conflicts that have undercut business confidence and investment, the IMF said Tuesday.

The world economy is slowing to its weakest pace since the global financial crisis, amid continuing trade conflicts that have undercut business confidence and investment, the IMF said Tuesday. It warned that the outlook is beset by risks, and urged policymakers to work to find resolutions to trade disputes since there are limited tools to respond to a new crisis. "With a synchronized slowdown and uncertain recovery, the global outlook remains precarious," International Monetary Fund chief economist Gita Gopinath said in her introduction to the latest forecasts. The IMF for the past year has every three months cut projected growth for 2019 as trade conflicts worsened. In its latest World Economic Outlook, it trimmed the estimate by another two-tenths, to 3.0 per cent. The report also lowered the 2020 forecast by a tenth to 3.4 per cent. "At three per cent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively deescalate trade and geopolitical tensions," Gopinath said. In addition, the trade conflicts and a slowdown in auto sales worldwide means trade growth has slowed sharply, falling in the first half of the year to its weakest since 2012, with an estimated increase of just 1.1 per cent this year after a 3.6 per cent jump in 2018. Running low on ammo While the US economy also has been hit by uncertainty — largely created by President Donald Trump's trade offensive — the world's largest economy remains a bright spot on the global stage, the report said. After upgrading its US outlook in July, the latest WEO reversed course and cutting the US forecast this year to 2.4 per cent — still above trend, but two-tenths below the July forecast. In 2020, the IMF projects US GDP to expand by 2.1 per cent, unchanged from the prior report. "For the United States, trade-related uncertainty has had negative effects on investment, but employment and consumption continue to be robust, buoyed also by policy stimulus," Gopinath said. Major central banks have taken steps to soften the blow to growth by lowering interest rates, without which the downturn would have been worse, she said. However, she cautioned that monetary policy "cannot be the only game in town" and governments, notably in countries like Germany, should take advantage of low rates to make investments to support growth. "With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot," Gopinath warned. The US-China trade war alone is estimated to shrink the world economy by 0.8 per cent in 2020, the IMF said. The fund warned that risks to the outlook predominate, and the uncertainty around trade policy -- which causes businesses to hold off on investments and undermines confidence — will take a larger chunk out of growth than the tariffs themselves Slowing auto sales "To forestall such an outcome, policies should decisively aim at defusing trade tensions, reinvigorating multilateral cooperation, and providing timely support to an economic activity where needed," the report said. But trade is not the only reason for the global slowdown: the report notes that in China's economy, for example, growth is moderating as intended amid slowing domestic demand. Other major economies like Brazil, India, Mexico, Russia and South Africa are slowing this year due to "idiosyncratic reasons" but are expected to recover in 2020. "A notable feature of the sluggish growth in 2019 is the sharp and geographically broad-based slowdown in manufacturing and global trade," the IMF said, which in addition to the higher tariffs and trade uncertainty is the result of the contracting auto industry. That slowdown has had an impact in Germany, China and India, the report said.

World economy at its weakest pace since global financial crisis: International Monetary Fund

HSBC is planning to lay off up to 10,000 staff, a report said Monday, just weeks after its <a href="https://www.wionews.com/business-economy/hsbc-ceo-john-flint-resigns-as-it-faces-challenging-geopolitics-240704">chief executive stepped down</a> and announced the axing 4,000 posts citing a weak global outlook.

The latest cuts mostly in high-paid roles are part of a fresh cost-cutting drive by new boss Noel Quinn as the banking titan struggles to adjust to falling interest rates, Brexit and the long-running trade war, the Financial Times reported.

"We've known for years that we need to do something about our cost base, the largest component of which is people -&nbsp;now we are finally grasping the nettle," the paper quoted an unnamed source as saying.

"There's some very hard modelling going on. We are asking why we have so many people in Europe when we've got double-digit returns in parts of Asia."

The London-headquartered bank last month announced the shock exit of CEO John Flint after just 18 months in the hot seat but gave no reason for the decision.

At the same time, it revealed it would axe two per cent of its global workforce, or roughly 4,000 mostly management jobs, in a new restructuring aimed at weathering the global turmoil.

Still, its reported first-half net profit rose 18.6 per cent on-year to $8.5 billion.

It is due to report third-quarter earnings at the end of October.

The cost-cutting drive is in line with other lenders who are battling global headwinds.

US banks including JPMorgan Chase and Wells Fargo have lowered their 2019 profit forecasts tied to interest rates as central banks around the world loosen monetary policy in response to a weakening global growth outlook.

Lower interest rates mean less profit on loans made by the banks, especially if they have offered higher returns on deposits to attract customers.

And last month Germany's second-largest lender Commerzbank said it plans to cut the equivalent of 4,300 full-time posts -&nbsp;a tenth of its workforce -&nbsp;and shut 200 branches as it restructures.

<a href="https://www.wionews.com/world/deutsche-bank-says-to-slash-18000-jobs-by-2022-233897">Deutsche Bank has announced 18,000 job cuts</a> and France's Societe Generale 1,600.

HSBC is planning to lay off up to 10,000 staff, a report said Monday, just weeks after its chief executive stepped down and announced the axing 4,000 posts citing a weak global outlook.

HSBC is planning to lay off up to 10,000 staff, a report said Monday, just weeks after its chief executive stepped down and announced the axing 4,000 posts citing a weak global outlook. The latest cuts mostly in high-paid roles are part of a fresh cost-cutting drive by new boss Noel Quinn as the banking titan struggles to adjust to falling interest rates, Brexit and the long-running trade war, the Financial Times reported. "We've known for years that we need to do something about our cost base, the largest component of which is people - now we are finally grasping the nettle," the paper quoted an unnamed source as saying. "There's some very hard modelling going on. We are asking why we have so many people in Europe when we've got double-digit returns in parts of Asia." The London-headquartered bank last month announced the shock exit of CEO John Flint after just 18 months in the hot seat but gave no reason for the decision. At the same time, it revealed it would axe two per cent of its global workforce, or roughly 4,000 mostly management jobs, in a new restructuring aimed at weathering the global turmoil. Still, its reported first-half net profit rose 18.6 per cent on-year to $8.5 billion. It is due to report third-quarter earnings at the end of October. The cost-cutting drive is in line with other lenders who are battling global headwinds. US banks including JPMorgan Chase and Wells Fargo have lowered their 2019 profit forecasts tied to interest rates as central banks around the world loosen monetary policy in response to a weakening global growth outlook. Lower interest rates mean less profit on loans made by the banks, especially if they have offered higher returns on deposits to attract customers. And last month Germany's second-largest lender Commerzbank said it plans to cut the equivalent of 4,300 full-time posts - a tenth of its workforce - and shut 200 branches as it restructures. Deutsche Bank has announced 18,000 job cuts and France's Societe Generale 1,600.

HSBC planning to cut 10,000 more jobs: Report

German industrial orders fell more than expected in August on weaker domestic demand, data showed on Monday, adding to signs that a manufacturing slump is pushing Europe's largest economy into recession.

Contracts for 'Made in Germany' goods fell 0.6 per cent&nbsp;from the previous month, with demand for capital goods down 1.6 per cent&nbsp;the Economy Ministry said. The overall fall compared with a Reuters consensus forecast for a drop of 0.3 per cent.

"The German economy is in the midst of a recession. Today's data make that clear again," said Thomas Gitzel, an economist at VP Bank Group.

The economy shrank by 0.1 per cent&nbsp;in the second quarter, and recent data have pointed to continued weakness in manufacturing in the third quarter. Most economists define a recession as two straight quarters of contraction.

"The German government will probably come under growing pressure to give up its strict budget policy," added Gitzel.

The government has so far stuck to its balanced-budget policy, despite pressure from economists and other governments to spend more to boost flagging demand.

Finance Minister Olaf Scholz said last week that Germany would be able to cope with an economic crisis but added that he did not expect a downturn to be as bad as it was in 2008/2009.

"The weakness in demand in the industry continues," the Economy Ministry said in a statement accompanying Monday's data. "The industrial sector remains subdued for the time being."

Germany's export-reliant manufacturers are suffering from a slowing world economy and business uncertainty linked to a trade dispute between the United States and China as well as Britain's planned but delayed exit from the European Union.

Monday's weaker-than-expected data added to the sense of gloom around the German manufacturing sector.

A survey released last Tuesday showed the manufacturing recession deepened in September, with factories recording their weakest performance since the world financial crisis a decade ago.

Last Wednesday, leading economic institutes slashed their growth forecasts for the economy for this year and next, blaming weaker global demand for manufacturing goods and increased business uncertainty linked to trade disputes.

The institutes also called on Chancellor Angela Merkel's coalition government to ditch its budget policy of incurring no new debt if the growth outlook deteriorates. It has so far refused to do so.

Merkel's government has managed to raise public spending without incurring new debt since 2014, thanks to an unusually long growth cycle, record-high employment, buoyant tax revenues and the European Central Bank's bond-buying plan.

But with the economy slowing and tax revenues waning, the fiscal room to counter a recession is getting smaller. At the same time, Germany's borrowing costs have turned into premiums, which means investors are actually willing to pay the state a bonus for being able to lend it billions of euros.

German industrial orders fell more than expected in August on weaker domestic demand, data showed on Monday, adding to signs that a manufacturing slump is pushing Europe's largest economy into recession.

German industrial orders fell more than expected in August on weaker domestic demand, data showed on Monday, adding to signs that a manufacturing slump is pushing Europe's largest economy into recession. Contracts for 'Made in Germany' goods fell 0.6 per cent from the previous month, with demand for capital goods down 1.6 per cent the Economy Ministry said. The overall fall compared with a Reuters consensus forecast for a drop of 0.3 per cent. "The German economy is in the midst of a recession. Today's data make that clear again," said Thomas Gitzel, an economist at VP Bank Group. The economy shrank by 0.1 per cent in the second quarter, and recent data have pointed to continued weakness in manufacturing in the third quarter. Most economists define a recession as two straight quarters of contraction. "The German government will probably come under growing pressure to give up its strict budget policy," added Gitzel. The government has so far stuck to its balanced-budget policy, despite pressure from economists and other governments to spend more to boost flagging demand. Finance Minister Olaf Scholz said last week that Germany would be able to cope with an economic crisis but added that he did not expect a downturn to be as bad as it was in 2008/2009. "The weakness in demand in the industry continues," the Economy Ministry said in a statement accompanying Monday's data. "The industrial sector remains subdued for the time being." Germany's export-reliant manufacturers are suffering from a slowing world economy and business uncertainty linked to a trade dispute between the United States and China as well as Britain's planned but delayed exit from the European Union. Monday's weaker-than-expected data added to the sense of gloom around the German manufacturing sector. A survey released last Tuesday showed the manufacturing recession deepened in September, with factories recording their weakest performance since the world financial crisis a decade ago. Last Wednesday, leading economic institutes slashed their growth forecasts for the economy for this year and next, blaming weaker global demand for manufacturing goods and increased business uncertainty linked to trade disputes. The institutes also called on Chancellor Angela Merkel's coalition government to ditch its budget policy of incurring no new debt if the growth outlook deteriorates. It has so far refused to do so. Merkel's government has managed to raise public spending without incurring new debt since 2014, thanks to an unusually long growth cycle, record-high employment, buoyant tax revenues and the European Central Bank's bond-buying plan. But with the economy slowing and tax revenues waning, the fiscal room to counter a recession is getting smaller. At the same time, Germany's borrowing costs have turned into premiums, which means investors are actually willing to pay the state a bonus for being able to lend it billions of euros.

German recession looms as industrial orders drop more than expected

Weaker demand from abroad drove a bigger-than-expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe's biggest economy <a href="https://www.wionews.com/business-economy/uk-business-activity-contracts-over-brexit-turmoil-raises-recession-risk-247628">into a recession in the third quarter</a>.

Germany's export-reliant economy is suffering from slower global growth and business uncertainty caused by US&nbsp;President Donald Trump's 'America First' trade policies and Britain's planned, but delayed, exit from the European Union.

Contracts for 'Made in Germany' goods fell 2.7 per cent from the previous month in July, data showed on Thursday, driven by a big drop in bookings from non-euro zone countries, the economy ministry said. That undershot a Reuters consensus forecast for a 1.5 per cent&nbsp;drop.

"The misery in manufacturing continues. The decline in new orders significantly increases the risk of a recession for the German economy," VP Bank analyst Thomas Gitzel said.

Germany's gross domestic product contracted by 0.1 per cent&nbsp;quarter-on-quarter in the second quarter on weaker exports, with the decrease in foreign sales mainly driven by Britain and below average demand from China.

"The danger is great that negative growth will also be recorded in the third quarter," Gitzel added.

The economy ministry said new orders in manufacturing had a weak start to the third quarter and that the outlook for the sector was also looking grim.

"In light of still unresolved international trade conflicts and muted business expectations in manufacturing, there are still no signs of a fundamental improvement in the industrial sector in the coming months," the ministry added.

Orders from non-euro zone countries plunged nearly 7 per cent&nbsp;on the month while demand from other euro zone countries and domestic bookings rose slightly, the data showed.

Without the distorting effects of bulk orders, industrial orders rose 0.5 per cent&nbsp;on the month in July, the ministry added.

The overall reading for June was revised up to an increase of 2.7 from a previously reported 2.5 per cent&nbsp;increase.

The VDMA business association said engineering orders in July fell by 3 per cent&nbsp;in real terms from the previous year, driven by weaker demand from both domestic and foreign clients.

"The business and export outlook is still gloomy for the second half of the year given the economic and political risks," VDMA chief economist Ralph Wiechers said.

Germany's DIHK business association said that companies around the globe were reluctant to invest due to slowing world trade and growing business uncertainty.

"So there is little light on the horizon for German industry which is characterized by its large share of capital goods producers," DIHK economist Kevin Heidenreich.

Carsten Brzeski from ING noted that the downward trend in manufacturing was not only driven by weaker foreign demand and trade conflicts.

"Since the start of the year, domestic orders have actually dropped more than foreign orders, suggesting that global woes have reached the domestic economy," Brzeski added.

Labour market data showed last week that seasonally adjusted unemployment rose in August, eroding a pillar of growth that has helped support Germany's traditionally export-driven economy.

With its sales abroad hit by a worsening trade climate, a global economic slowdown and the increasingly chaotic run-up to Brexit, the bulk of Germany's growth momentum is now being generated domestically - a dependency that leaves it exposed to any weakening of the jobs market.

Goldman Sachs Chief Financial Officer Stephen Scherr said on Thursday that the German economy is in the "early days of a slowdown".

The government expects economic growth to slow to 0.5 per cent&nbsp;this year from 1.5 per cent&nbsp;in the previous year. This would be the weakest expansion since 2013 when the euro zone struggled amid a sovereign debt crisis.

Weaker demand from abroad drove a bigger-than-expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe's biggest economy into a recession in the third quarter.

Weaker demand from abroad drove a bigger-than-expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe's biggest economy into a recession in the third quarter. Germany's export-reliant economy is suffering from slower global growth and business uncertainty caused by US President Donald Trump's 'America First' trade policies and Britain's planned, but delayed, exit from the European Union. Contracts for 'Made in Germany' goods fell 2.7 per cent from the previous month in July, data showed on Thursday, driven by a big drop in bookings from non-euro zone countries, the economy ministry said. That undershot a Reuters consensus forecast for a 1.5 per cent drop. "The misery in manufacturing continues. The decline in new orders significantly increases the risk of a recession for the German economy," VP Bank analyst Thomas Gitzel said. Germany's gross domestic product contracted by 0.1 per cent quarter-on-quarter in the second quarter on weaker exports, with the decrease in foreign sales mainly driven by Britain and below average demand from China. "The danger is great that negative growth will also be recorded in the third quarter," Gitzel added. The economy ministry said new orders in manufacturing had a weak start to the third quarter and that the outlook for the sector was also looking grim. "In light of still unresolved international trade conflicts and muted business expectations in manufacturing, there are still no signs of a fundamental improvement in the industrial sector in the coming months," the ministry added. Orders from non-euro zone countries plunged nearly 7 per cent on the month while demand from other euro zone countries and domestic bookings rose slightly, the data showed. Without the distorting effects of bulk orders, industrial orders rose 0.5 per cent on the month in July, the ministry added. The overall reading for June was revised up to an increase of 2.7 from a previously reported 2.5 per cent increase. The VDMA business association said engineering orders in July fell by 3 per cent in real terms from the previous year, driven by weaker demand from both domestic and foreign clients. "The business and export outlook is still gloomy for the second half of the year given the economic and political risks," VDMA chief economist Ralph Wiechers said. Germany's DIHK business association said that companies around the globe were reluctant to invest due to slowing world trade and growing business uncertainty. "So there is little light on the horizon for German industry which is characterized by its large share of capital goods producers," DIHK economist Kevin Heidenreich. Carsten Brzeski from ING noted that the downward trend in manufacturing was not only driven by weaker foreign demand and trade conflicts. "Since the start of the year, domestic orders have actually dropped more than foreign orders, suggesting that global woes have reached the domestic economy," Brzeski added. Labour market data showed last week that seasonally adjusted unemployment rose in August, eroding a pillar of growth that has helped support Germany's traditionally export-driven economy. With its sales abroad hit by a worsening trade climate, a global economic slowdown and the increasingly chaotic run-up to Brexit, the bulk of Germany's growth momentum is now being generated domestically - a dependency that leaves it exposed to any weakening of the jobs market. Goldman Sachs Chief Financial Officer Stephen Scherr said on Thursday that the German economy is in the "early days of a slowdown". The government expects economic growth to slow to 0.5 per cent this year from 1.5 per cent in the previous year. This would be the weakest expansion since 2013 when the euro zone struggled amid a sovereign debt crisis.

Germany risks recession risk as industrial orders plunge

Megan Helsel, a kayaking wildlife specialist, has her dream job, and T'angelo Magee is making headway toward his, a commercial pilot. Both say work is central to their identity.

Megan Helsel, a kayaking wildlife specialist, has her dream job, and T'angelo Magee is making headway toward his, a commercial pilot. Both say work is central to their identity. Both are disabled. Americans with disabilities, physical and cognitive, in recent months have been joining the workforce at a faster pace than those without disabilities, according to data collected by organizations that work with the disabled. Labor Day on September 2 may be the first time the disabled regain an employment rate that was upended by the 2008 Great Recession. The gains are the result of both technological advances and workplace flexibility that lessens commuting barriers, according to experts on disabled workers. But the gains also reflect the pull of a tight labour market. With the US unemployment rate at just 3.7 per cent - roughly a half-century low - employers have increasingly considered job applicants they often overlooked in the first stages of what is now a record-long economic expansion. "The recent uptick is basically 'the full employment story' - it makes firms look at other populations they haven't previously considered," said Andrew Houtenville, economics associate professor at the University of New Hampshire. Helsel was working in her kayak on bird counts and other wildlife projects for the US Department of Agriculture in New Jersey in 2016 when a previously undetected tumour burst in her spine, leaving her paralyzed from the waist down. When her doctor broke the news about her sudden life-altering disability, Helsel's first question concerned returning to work. "He said, 'You're probably never going to walk again.' I asked, 'When am I going to be able to kayak again?'" recalled Helsel, 32. New technology has helped Helsel and other disabled people to get on an employer's payroll. Widely-used apps include Venmo, which allows mobility-challenged workers to easily bill customers, and iPhone's VoiceOver, which lets visually impaired workers conduct business. More specialized breakthroughs include an electronic-stimulating leg cuff Helsel wears instead of a bulkier brace that restricts her to wearing sneakers. The cuff enables her to don thermal boots needed to kayak through frigid winter waters. Recession Threat Helsel is among the roughly 15 million disabled Americans ages 16 to 64, which represents about 7 per cent of all working-age Americans, according to the Bureau of Labor Statistics' Current Population Survey for July. Labour force participation for working-age disabled Americans increased 6.5 per cent in July from a year earlier, compared to a 0.3 per cent increase for working-age Americans without disabilities, according to national Trends in Disability Employment (nTIDE), a monthly report issued by the Kessler Foundation, a non-profit organization, and the University of New Hampshire's Institute on Disability. It is part of a two-year strengthening of the job market for disabled Americans, a rebound from the 2008 recession, which obliterated jobs for disabled workers at a faster rate than for those without disabilities, said John O'Neill, director of employment and disability research at Kessler Foundation. The employment rate for disabled workers was 32.7 per cent in 2008 and plunged to 24.1 per cent in 2014. While workers without disabilities also suffered job losses, they regained pre-recession employment rates by June 2017 and, maintaining momentum, their job numbers are higher than ever. Disabled workers have yet to reach that recovery milestone, although experts say it is now in sight. Slow and steady growth started in 2015 and boosted employment to 31.2 per cent last month, according to the most recent nTIDE report. By Labor Day, the rate could reach 32.7 per cent again, said Sarah Boege, a UNH policy analyst. Less clear, however, is whether that hard-won recovery can last through what some economists say is an impending recession. Despite the upswing in employment rates for disabled workers, some employers have outdated notions about disabled workers that create barriers to landing a job. Magee, a heavy equipment operator who was paralyzed from the chest down in a motorcycle accident, has gone on 26 job interviews in the past six months for such positions as an office administrator for a building complex and front desk receptionist for a law firm. "On the resume and phone interviews, it’s like I’m the perfect candidate. Then when I get there and they see I’m in the wheelchair, everything changes," said Magee, 32, who ended up starting his own mobile notary business in Hackensack, New Jersey. His career goal is to pilot small aircraft for commercial US travellers. The US Army veteran who is married with a 3-year-old daughter this year was trained in an aircraft with adaptive controls. He was among 10 students selected out of 27,000 applicants for the Able Flight program. Now he is searching for similar training to earn his commercial license. "In my wheelchair, I do a lot more than the average man on the street," Magee said. "I'm definitely going to do it."

Disabled workers chase 'dream jobs' in the tight US labour market

Global bond yields flirted with record lows while stocks struggled to recover on Thursday, as global recession worries from intensifying US-China frictions and the spectre of a no-deal Brexit drove investors to safer harbours.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.38%, Singapore shares hit eight-month lows, while Japan's Nikkei shed 0.44%.

On Wall Street, the S&amp;P 500 gained 0.65% on Wednesday due in part to gains in the energy sector following a rebound in oil prices. But US stock futures lost 0.4% in Asia.

Bond markets around the world painted a gloomier picture, with yields on 30-year US Treasuries and 10-year German bunds yield both hitting record lows - 1.905 per cent and minus 0.716 per cent on Wednesday.

Inversion remains a prominent feature across the US yield curve, where long-dated yields are below short-dated ones, an unsettling sign as yield curve inversions have been a reliable leading indicator of future US recessions.

Italy's 10-year bond yield briefly fell below 1% for the first time ever. The rush to buy Italian debt, which carries higher yields than the 'core' eurozone countries, was in part prompted by growing hopes that a new government will soon be formed in Rome and a new election averted.

In Asia, the 10-year Japanese government bond yield dipped 1 basis point to minus 0.285%, just above its record low of minus 0.300% touched in 2016.

"Falls in global bond yields reflect growing concerns that long-term global growth is slowing down on US-China tensions and worries over subsequent global supply chain disruptions," said Tomoo Kinoshita, global market strategist at Invesco Asset Management in Tokyo.

"Stock markets, on the other hand, are supported in the near-term by hopes of more stimulus, notably from the Federal Reserve and the European Central Bank," he said.

The two major central banks are expected to cut rates next month, while many investors believe the Bank of Japan could join the fray if market sentiment weakens further.

The Trump administration on Wednesday made official its extra 5% tariff on $300 billion in Chinese imports and set collection dates of September 1 and December 15.

That means products such as smartwatches, Bluetooth headphones, flat-panel televisions and many types of footwear will be levied from next month, raising worries about US consumption, one of the few remaining bright spots in the world economy.

The precious metal markets highlighted investors' quest to buy safer assets.

Gold rose 0.17% to $1,541.3 per ounce, near six-year highs of $1,556.1 set earlier in the week while silver extended its bull run and rose 0.85% to fetch $18.32 per ounce, edging near its 2017 peak.

Sharp falls in bond yields, however, have some investors worried that the recent rally in bond prices may have gone too far.

The 30-year US bond yield, now at 1.921%, has fallen 60 basis points so far this month, to slip below dividend yield of US shares, which stood at 2.04%.

"Yields may have fallen to unjustifiable levels even if one bets on a long-term stagnation in the global economy. And when we had a major bond correction in Europe four years ago, the adjustment was quite sharp," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

In the currency market, the yen gained 0.2% to 105.90 per dollar while the New Zealand dollar slipped 0.4% to four-year lows on grim domestic business sentiment data.

The euro was steady at $1.1084.

The MSCI emerging market currency index is at its lowest levels since mid-November, having fallen 0.9% so far this week and on course to mark its biggest monthly fall in more than seven years driven by worries about a global slowdown.

The British pound licked its wounds at $1.2200, having slumped 0.61% the previous day as the most serious UK political crisis in decades deepened after Prime Minister Boris Johnson decided to suspend Britain's parliament for more than a month before Brexit.

The move will limit the time opponents have to derail a disorderly Brexit but also increases the chance that Johnson could face a vote of no-confidence in his government, and possibly an election.

"From an economic point of view, actively pursuing a no-deal Brexit through suspending parliament is tantamount to actively pursuing a recession," said Seema Shah, Chief Strategist, Principal Global Investors in London.

Concerns about Brexit are already taking a toll on Europe, with the recent export slump in Germany driven mainly by weaker sales to Britain rather than the broader trade war.

Oil prices held firm after a gain of nearly 2% in the previous session as a larger-than-expected decline in US crude stockpiles helped ease worries about weakening oil demand.

In Asia Brent crude futures fell 0.1% to $60.43 a barrel while US West Texas Intermediate (WTI) crude gained 0.18% to $55.88 per barrel.

Global bond yields flirted with record lows while stocks struggled to recover on Thursday, as global recession worries from intensifying US-China frictions and the spectre of a no-deal Brexit drove investors to safer harbours.

Global bond yields flirted with record lows while stocks struggled to recover on Thursday, as global recession worries from intensifying US-China frictions and the spectre of a no-deal Brexit drove investors to safer harbours. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.38%, Singapore shares hit eight-month lows, while Japan's Nikkei shed 0.44%. On Wall Street, the S&P 500 gained 0.65% on Wednesday due in part to gains in the energy sector following a rebound in oil prices. But US stock futures lost 0.4% in Asia. Bond markets around the world painted a gloomier picture, with yields on 30-year US Treasuries and 10-year German bunds yield both hitting record lows - 1.905 per cent and minus 0.716 per cent on Wednesday. Inversion remains a prominent feature across the US yield curve, where long-dated yields are below short-dated ones, an unsettling sign as yield curve inversions have been a reliable leading indicator of future US recessions. Italy's 10-year bond yield briefly fell below 1% for the first time ever. The rush to buy Italian debt, which carries higher yields than the 'core' eurozone countries, was in part prompted by growing hopes that a new government will soon be formed in Rome and a new election averted. In Asia, the 10-year Japanese government bond yield dipped 1 basis point to minus 0.285%, just above its record low of minus 0.300% touched in 2016. "Falls in global bond yields reflect growing concerns that long-term global growth is slowing down on US-China tensions and worries over subsequent global supply chain disruptions," said Tomoo Kinoshita, global market strategist at Invesco Asset Management in Tokyo. "Stock markets, on the other hand, are supported in the near-term by hopes of more stimulus, notably from the Federal Reserve and the European Central Bank," he said. The two major central banks are expected to cut rates next month, while many investors believe the Bank of Japan could join the fray if market sentiment weakens further. The Trump administration on Wednesday made official its extra 5% tariff on $300 billion in Chinese imports and set collection dates of September 1 and December 15. That means products such as smartwatches, Bluetooth headphones, flat-panel televisions and many types of footwear will be levied from next month, raising worries about US consumption, one of the few remaining bright spots in the world economy. The precious metal markets highlighted investors' quest to buy safer assets. Gold rose 0.17% to $1,541.3 per ounce, near six-year highs of $1,556.1 set earlier in the week while silver extended its bull run and rose 0.85% to fetch $18.32 per ounce, edging near its 2017 peak. Sharp falls in bond yields, however, have some investors worried that the recent rally in bond prices may have gone too far. The 30-year US bond yield, now at 1.921%, has fallen 60 basis points so far this month, to slip below dividend yield of US shares, which stood at 2.04%. "Yields may have fallen to unjustifiable levels even if one bets on a long-term stagnation in the global economy. And when we had a major bond correction in Europe four years ago, the adjustment was quite sharp," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo. In the currency market, the yen gained 0.2% to 105.90 per dollar while the New Zealand dollar slipped 0.4% to four-year lows on grim domestic business sentiment data. The euro was steady at $1.1084. The MSCI emerging market currency index is at its lowest levels since mid-November, having fallen 0.9% so far this week and on course to mark its biggest monthly fall in more than seven years driven by worries about a global slowdown. The British pound licked its wounds at $1.2200, having slumped 0.61% the previous day as the most serious UK political crisis in decades deepened after Prime Minister Boris Johnson decided to suspend Britain's parliament for more than a month before Brexit. The move will limit the time opponents have to derail a disorderly Brexit but also increases the chance that Johnson could face a vote of no-confidence in his government, and possibly an election. "From an economic point of view, actively pursuing a no-deal Brexit through suspending parliament is tantamount to actively pursuing a recession," said Seema Shah, Chief Strategist, Principal Global Investors in London. Concerns about Brexit are already taking a toll on Europe, with the recent export slump in Germany driven mainly by weaker sales to Britain rather than the broader trade war. Oil prices held firm after a gain of nearly 2% in the previous session as a larger-than-expected decline in US crude stockpiles helped ease worries about weakening oil demand. In Asia Brent crude futures fell 0.1% to $60.43 a barrel while US West Texas Intermediate (WTI) crude gained 0.18% to $55.88 per barrel.

Bonds reign supreme, equities struggle on recession, Brexit fears

Indian shares slipped on Thursday, led by declines in financials and metals, as fears of an impending global recession and worsening Sino-US trade relations marred investor sentiment.

The broader NSE Nifty fell 0.46% to 10,994.55 as of 0354 GMT, while the benchmark BSE Sensex inched down 0.44% to 37,293.80.

Meanwhile, stocks in regional markets across Asia struggled to recover with MSCI's broadest index of Asia-Pacific shares outside Japan trading flat.

Domestic investors also remained cautious ahead of GDP data for the April-June quarter due on Friday.

"Sentiment is a fair worry, consumer and business sentiment has to change," said Sunil Sharma, chief investment officer at Sanctum Wealth Management in Mumbai.

"The outcome of the trade war is also uncertain."

The weather office on Wednesday said monsoon rains in India were below average for the first time in five weeks in the week through Wednesday, further dampening spirits.

Monsoon rains are key to farm output and economic growth as the agricultural sector accounts for about 15% of India's $2.5 trillion economy.

Indian markets are likely to see some volatility ahead of August derivative contracts' expiry.

Shares of Indiabulls Housing Finance Ltd slipped as much as 7.97%, the stock will not be included on the Nifty 50 NSE Nifty from September 27.

The Nifty metals index inched 0.82% lower, with all 14 constituents trading in the red.

Only 10 of the 50 stocks on the NSE blue-chip index were trading in postive territory.

Meanwhile, sugar producers like EID-Parry (India) Ltd gained as much as 2.45% and Rana Sugars Ltd surged 6.98% after India's cabinet approved incentives of 62.68 billion rupees to help cash-strapped mills to export 6 million tonnes of sugar in the 2019/20 marketing year starting from October 1.

Shares of Sun Pharmaceutical Industries Ltd was the top gainer on the NSE index, rising as much as 4.49%. Media reports https://www.business-standard.com/article/markets/sebi-inquiry-clears-sun-pharma-finds-no-merit-in-allegations-of-fraud-119082801436_1.html on Thursday said an enquiry by the Securities and Exchange Board of India (SEBI) had found no merit in allegation of violation of securities laws by the firm.

On Wednesday late evening, India's federal cabinet approved further liberalizing of foreign direct investment (FDI) rules in digital media, coal mining, associated infrastructure and sales of fuels in an attempt to get economic growth back on track.

Indian shares slipped on Thursday, led by declines in financials and metals, as fears of an impending global recession and worsening Sino-US trade relations marred investor sentiment.

Indian shares slipped on Thursday, led by declines in financials and metals, as fears of an impending global recession and worsening Sino-US trade relations marred investor sentiment. The broader NSE Nifty fell 0.46% to 10,994.55 as of 0354 GMT, while the benchmark BSE Sensex inched down 0.44% to 37,293.80. Meanwhile, stocks in regional markets across Asia struggled to recover with MSCI's broadest index of Asia-Pacific shares outside Japan trading flat. Domestic investors also remained cautious ahead of GDP data for the April-June quarter due on Friday. "Sentiment is a fair worry, consumer and business sentiment has to change," said Sunil Sharma, chief investment officer at Sanctum Wealth Management in Mumbai. "The outcome of the trade war is also uncertain." The weather office on Wednesday said monsoon rains in India were below average for the first time in five weeks in the week through Wednesday, further dampening spirits. Monsoon rains are key to farm output and economic growth as the agricultural sector accounts for about 15% of India's $2.5 trillion economy. Indian markets are likely to see some volatility ahead of August derivative contracts' expiry. Shares of Indiabulls Housing Finance Ltd slipped as much as 7.97%, the stock will not be included on the Nifty 50 NSE Nifty from September 27. The Nifty metals index inched 0.82% lower, with all 14 constituents trading in the red. Only 10 of the 50 stocks on the NSE blue-chip index were trading in postive territory. Meanwhile, sugar producers like EID-Parry (India) Ltd gained as much as 2.45% and Rana Sugars Ltd surged 6.98% after India's cabinet approved incentives of 62.68 billion rupees to help cash-strapped mills to export 6 million tonnes of sugar in the 2019/20 marketing year starting from October 1. Shares of Sun Pharmaceutical Industries Ltd was the top gainer on the NSE index, rising as much as 4.49%. Media reports https://www.business-standard.com/article/markets/sebi-inquiry-clears-sun-pharma-finds-no-merit-in-allegations-of-fraud-119082801436_1.html on Thursday said an enquiry by the Securities and Exchange Board of India (SEBI) had found no merit in allegation of violation of securities laws by the firm. On Wednesday late evening, India's federal cabinet approved further liberalizing of foreign direct investment (FDI) rules in digital media, coal mining, associated infrastructure and sales of fuels in an attempt to get economic growth back on track.

Sensex and Nifty fall on recession worries; financials, metals drag

Global bond yields flirted with record lows while stocks struggled to recover on Thursday, as global recession worries from intensifying US-China frictions and the spectre of a no-deal Brexit drove investors to safer harbours.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.38%, Singapore shares hit eight-month lows, while Japan's Nikkei shed 0.44%.

On Wall Street, the S&amp;P 500 gained 0.65% on Wednesday due in part to gains in the energy sector following a rebound in oil prices. But U.S. stock futures lost 0.4% in Asia.

Bond markets around the world painted a gloomier picture, with yields on 30-year US Treasuries and 10-year German bunds yield both hitting record lows - 1.905 per cent and minus 0.716 per cent on Wednesday.

Inversion remains a prominent feature across the US&nbsp;yield curve, where long-dated yields are below short-dated ones, an unsettling sign as yield curve inversions have been a reliable leading indicator of future US recessions.

Italy's 10-year bond yield briefly fell below 1% for the first time ever.&nbsp;

The rush to buy Italian debt, which carries higher yields than the 'core' eurozone countries, was in part prompted by growing hopes that a new government will soon be formed in Rome and a new election averted.

In Asia, the 10-year Japanese government bond yield dipped 1 basis point to minus 0.285%, just above its record low of minus 0.300% touched in 2016.

"Falls in global bond yields reflect growing concerns that long-term global growth is slowing down on U.S.-China tensions and worries over subsequent global supply chain disruptions," said Tomoo Kinoshita, global market strategist at Invesco Asset Management in Tokyo.

"Stock markets, on the other hand, are supported in the near-term by hopes of more stimulus, notably from the Federal Reserve and the European Central Bank," he said.

The two major central banks are expected to cut rates next month, while many investors believe the Bank of Japan could join the fray if market sentiment weakens further.

The Trump administration on Wednesday made official its extra 5% tariff on $300 billion in Chinese imports and set collection dates of Sept. 1 and December 15.

That means products such as smartwatches, Bluetooth headphones, flat panel televisions and many types of footwear will be levied from next month, raising worries about US consumption, one of the few remaining bright spots in the world economy.

The precious metal markets highlighted investors' quest to buy safer assets.

Gold rose 0.17% to $1,541.3 per ounce, near six-year highs of $1,556.1 set earlier in the week while silver extended its bull run and rose 0.85% to fetch $18.32 per ounce, edging near its 2017 peak.

Sharp falls in bond yields, however, have some investors worried that the recent rally in bond prices may have gone too far.

The 30-year U.S. bond yield, now at 1.921%, has fallen 60 basis points so far this month, to slip below dividend yield of U.S. shares, which stood at 2.04%.

"Yields may have fallen to unjustifiable levels even if one bets on a long-term stagnation in the global economy. And when we had a major bond correction in Europe four years ago, the adjustment was quite sharp," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

In the currency market, the yen gained 0.2% to 105.90 per dollar while the New Zealand dollar slipped 0.4% to four-year lows on grim domestic business sentiment data.

The euro was steady at $1.1084.

The MSCI emerging market currency index is at its lowest levels since mid-November, having fallen 0.9% so far this week and on course to mark its biggest monthly fall in more than seven years driven by worries about a global slowdown.

The British pound licked its wounds at $1.2200, having slumped 0.61% the previous day as the most serious UK political crisis in decades deepened after Prime Minister Boris Johnson decided to suspend Britain's parliament for more than a month before Brexit.

The move will limit the time opponents have to derail a disorderly Brexit but also increases the chance that Johnson could face a vote of no-confidence in his government, and possibly an election.

"From an economic point of view, actively pursuing a no-deal Brexit through suspending parliament is tantamount to actively pursuing a recession," said Seema Shah, Chief Strategist, Principal Global Investors in London.

Concerns about Brexit are already taking a toll on Europe, with the recent export slump in Germany driven mainly by weaker sales to Britain rather than the broader trade war.

Oil prices held firm after a gain of nearly 2% in the previous session as a larger-than-expected decline in U.S. crude stockpiles helped ease worries about weakening oil demand.

In Asia Brent crude futures fell 0.1% to $60.43 a barrel while U.S. West Texas Intermediate (WTI) crude gained 0.18% to $55.88 per barrel.

Global bond yields flirted with record lows while stocks struggled to recover on Thursday, as global recession worries from intensifying US-China frictions and the spectre of a no-deal Brexit drove investors to safer harbours. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.38%, Singapore shares hit eight-month lows, while Japan's Nikkei shed 0.44%. On Wall Street, the S&P 500 gained 0.65% on Wednesday due in part to gains in the energy sector following a rebound in oil prices. But U.S. stock futures lost 0.4% in Asia. Bond markets around the world painted a gloomier picture, with yields on 30-year US Treasuries and 10-year German bunds yield both hitting record lows - 1.905 per cent and minus 0.716 per cent on Wednesday. Inversion remains a prominent feature across the US yield curve, where long-dated yields are below short-dated ones, an unsettling sign as yield curve inversions have been a reliable leading indicator of future US recessions. Italy's 10-year bond yield briefly fell below 1% for the first time ever. The rush to buy Italian debt, which carries higher yields than the 'core' eurozone countries, was in part prompted by growing hopes that a new government will soon be formed in Rome and a new election averted. In Asia, the 10-year Japanese government bond yield dipped 1 basis point to minus 0.285%, just above its record low of minus 0.300% touched in 2016. "Falls in global bond yields reflect growing concerns that long-term global growth is slowing down on U.S.-China tensions and worries over subsequent global supply chain disruptions," said Tomoo Kinoshita, global market strategist at Invesco Asset Management in Tokyo. "Stock markets, on the other hand, are supported in the near-term by hopes of more stimulus, notably from the Federal Reserve and the European Central Bank," he said. The two major central banks are expected to cut rates next month, while many investors believe the Bank of Japan could join the fray if market sentiment weakens further. The Trump administration on Wednesday made official its extra 5% tariff on $300 billion in Chinese imports and set collection dates of Sept. 1 and December 15. That means products such as smartwatches, Bluetooth headphones, flat panel televisions and many types of footwear will be levied from next month, raising worries about US consumption, one of the few remaining bright spots in the world economy. The precious metal markets highlighted investors' quest to buy safer assets. Gold rose 0.17% to $1,541.3 per ounce, near six-year highs of $1,556.1 set earlier in the week while silver extended its bull run and rose 0.85% to fetch $18.32 per ounce, edging near its 2017 peak. Sharp falls in bond yields, however, have some investors worried that the recent rally in bond prices may have gone too far. The 30-year U.S. bond yield, now at 1.921%, has fallen 60 basis points so far this month, to slip below dividend yield of U.S. shares, which stood at 2.04%. "Yields may have fallen to unjustifiable levels even if one bets on a long-term stagnation in the global economy. And when we had a major bond correction in Europe four years ago, the adjustment was quite sharp," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo. In the currency market, the yen gained 0.2% to 105.90 per dollar while the New Zealand dollar slipped 0.4% to four-year lows on grim domestic business sentiment data. The euro was steady at $1.1084. The MSCI emerging market currency index is at its lowest levels since mid-November, having fallen 0.9% so far this week and on course to mark its biggest monthly fall in more than seven years driven by worries about a global slowdown. The British pound licked its wounds at $1.2200, having slumped 0.61% the previous day as the most serious UK political crisis in decades deepened after Prime Minister Boris Johnson decided to suspend Britain's parliament for more than a month before Brexit. The move will limit the time opponents have to derail a disorderly Brexit but also increases the chance that Johnson could face a vote of no-confidence in his government, and possibly an election. "From an economic point of view, actively pursuing a no-deal Brexit through suspending parliament is tantamount to actively pursuing a recession," said Seema Shah, Chief Strategist, Principal Global Investors in London. Concerns about Brexit are already taking a toll on Europe, with the recent export slump in Germany driven mainly by weaker sales to Britain rather than the broader trade war. Oil prices held firm after a gain of nearly 2% in the previous session as a larger-than-expected decline in U.S. crude stockpiles helped ease worries about weakening oil demand. In Asia Brent crude futures fell 0.1% to $60.43 a barrel while U.S. West Texas Intermediate (WTI) crude gained 0.18% to $55.88 per barrel.

Global markets: Bonds reign supreme, equities struggle on recession, Brexit fears

Oil prices rose on Wednesday, with US crude gaining 1.3% after an industry report showed stockpiles in the United States, the world's biggest oil user, fell more than expected, easing worries about economic growth due to the China-US trade war.

Brent crude futures climbed 59 cents, or 1.0%, to $60.10 a barrel by 0652 GMT. West Texas Intermediate (WTI) crude futures gained 70 cents, or 1.3%, to $55.63 a barrel.

US crude stockpiles fell sharply last week as imports dropped, plummeting by 11.1 million barrels, compared with expectations for a 2 million-barrel draw, data from industry group the American Petroleum Institute (API), showed.

The US government's weekly report is due Wednesday morning and if the official numbers confirm the API data then it will be the biggest weekly decline in nine weeks.

"The mammoth crude inventory draw has, at least for the time being, put to rest those US recessionary doom and gloom fears that have been hanging over oil markets like a dark cloud," said Stephen Innes, managing partner at Valour Markets.

Still, concerns about global growth amid the raging trade war between the United States and China, the world's two biggest crude oil consumers, are likely to cap gains.

US President Donald Trump said on Monday that he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through "calm" negotiations.

On Tuesday, however, concerns about trade resurfaced after China's foreign ministry said it had not heard of any recent telephone call between the United States and China on trade, and that it hopes Washington can stop its wrong actions and create conditions for talks.

Crude oil prices have fallen about 20% from 2019 highs hit in April, partly because of worries that the US-China trade war is hurting the global economy and could dent oil demand.

"Global recession risks are higher than at any stage since the (global financial crisis) and the US is not immune," Morgan Stanley said.

China's Commerce Ministry last week said it would impose additional tariffs of 5% or 10% on 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft.

In retaliation, Trump said he was ordering US companies to look at ways to close operations in China and make products in the United States.

Oil prices rose on Wednesday, with US crude gaining 1.3% after an industry report showed stockpiles in the United States, the world's biggest oil user, fell more than expected, easing worries about economic growth due to the China-US trade war.

Oil prices rose on Wednesday, with US crude gaining 1.3% after an industry report showed stockpiles in the United States, the world's biggest oil user, fell more than expected, easing worries about economic growth due to the China-US trade war. Brent crude futures climbed 59 cents, or 1.0%, to $60.10 a barrel by 0652 GMT. West Texas Intermediate (WTI) crude futures gained 70 cents, or 1.3%, to $55.63 a barrel. US crude stockpiles fell sharply last week as imports dropped, plummeting by 11.1 million barrels, compared with expectations for a 2 million-barrel draw, data from industry group the American Petroleum Institute (API), showed. The US government's weekly report is due Wednesday morning and if the official numbers confirm the API data then it will be the biggest weekly decline in nine weeks. "The mammoth crude inventory draw has, at least for the time being, put to rest those US recessionary doom and gloom fears that have been hanging over oil markets like a dark cloud," said Stephen Innes, managing partner at Valour Markets. Still, concerns about global growth amid the raging trade war between the United States and China, the world's two biggest crude oil consumers, are likely to cap gains. US President Donald Trump said on Monday that he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through "calm" negotiations. On Tuesday, however, concerns about trade resurfaced after China's foreign ministry said it had not heard of any recent telephone call between the United States and China on trade, and that it hopes Washington can stop its wrong actions and create conditions for talks. Crude oil prices have fallen about 20% from 2019 highs hit in April, partly because of worries that the US-China trade war is hurting the global economy and could dent oil demand. "Global recession risks are higher than at any stage since the (global financial crisis) and the US is not immune," Morgan Stanley said. China's Commerce Ministry last week said it would impose additional tariffs of 5% or 10% on 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft. In retaliation, Trump said he was ordering US companies to look at ways to close operations in China and make products in the United States.

Oil rises after inventory build eases recession worries

Oil prices fell on Monday, pushing US crude to its lowest in more than two weeks, as an intensifying US-China trade war knocked confidence in the global economy.

Brent crude was down 63 cents, or 1.1%, at $58.71 a barrel by 0232 GMT, having earlier touched $58.24, the lowest since August 15.

US oil was down 68 cents, or 1.3%, to $53.49 a barrel, having earlier fallen to $52.96, the lowest since Aug. 9.

Concerns about an economic slowdown are being fanned by a ratcheting up of trade tensions between the United States and China.

China's commerce ministry said late last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products such as soybeans, and small aircraft.

In retaliation, President Donald Trump said he was ordering US companies to look at ways to close operations in China and make products in the United States.

"The only thing that will lift the storm clouds over oil markets this week will be if both China and the US talk and decide to mutually take a step back," said Jeffrey Halley, market analyst at Oanda. "I can't see that happening."

US Federal Reserve chair Jerome Powell told an annual economic symposium in Jackson Hole, Wyoming that the US economy is in a "favourable place" and the Federal Reserve will "act as appropriate" to keep the current economic expansion on track."

The remarks gave few clues about whether the central bank will cut interest rates at its next meeting.

But exacerbating concern over the possibility of recession, US manufacturing industries registered their first month of contraction in almost a decade.

The Brent/WTI spread was at minus $5.24, after widening 60 cents to settle at minus $5.17 on Friday. The spread blew out after China included US oil for the first time in its tariff moves.

Hedge funds and other money managers raised their bullish wagers on US crude to a three-month high in the latest week, the US Commodity Futures Trading Commission (CFTC) said.

US energy companies cut the most oil rigs in about four months last week, with the rig count falling to the lowest since January 2018, as producers cut spending on new drilling and completions.

Oil prices fell on Monday, pushing US crude to its lowest in more than two weeks, as an intensifying US-China trade war knocked confidence in the global economy.

Oil prices fell on Monday, pushing US crude to its lowest in more than two weeks, as an intensifying US-China trade war knocked confidence in the global economy. Brent crude was down 63 cents, or 1.1%, at $58.71 a barrel by 0232 GMT, having earlier touched $58.24, the lowest since August 15. US oil was down 68 cents, or 1.3%, to $53.49 a barrel, having earlier fallen to $52.96, the lowest since Aug. 9. Concerns about an economic slowdown are being fanned by a ratcheting up of trade tensions between the United States and China. China's commerce ministry said late last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products such as soybeans, and small aircraft. In retaliation, President Donald Trump said he was ordering US companies to look at ways to close operations in China and make products in the United States. "The only thing that will lift the storm clouds over oil markets this week will be if both China and the US talk and decide to mutually take a step back," said Jeffrey Halley, market analyst at Oanda. "I can't see that happening." US Federal Reserve chair Jerome Powell told an annual economic symposium in Jackson Hole, Wyoming that the US economy is in a "favourable place" and the Federal Reserve will "act as appropriate" to keep the current economic expansion on track." The remarks gave few clues about whether the central bank will cut interest rates at its next meeting. But exacerbating concern over the possibility of recession, US manufacturing industries registered their first month of contraction in almost a decade. The Brent/WTI spread was at minus $5.24, after widening 60 cents to settle at minus $5.17 on Friday. The spread blew out after China included US oil for the first time in its tariff moves. Hedge funds and other money managers raised their bullish wagers on US crude to a three-month high in the latest week, the US Commodity Futures Trading Commission (CFTC) said. US energy companies cut the most oil rigs in about four months last week, with the rig count falling to the lowest since January 2018, as producers cut spending on new drilling and completions.

Oil prices fall as trade war raises recession fears

As one of the world’s most important trade and business hubs, <a href="https://www.wionews.com/world/hong-kong-police-fire-first-gunshot-water-cannon-in-protest-clashes-245583">Hong Kong was always going to struggle this year</a> because of the escalating US-China tariff war.

But after three months of anti-government protests, the semi-autonomous Chinese city, a <a href="https://www.wionews.com/world/hong-kong-police-arrest-29-after-overnight-clashes-more-protests-planned-245416">shopper’s paradise and gourmet destination</a> for millions of tourists each year, is facing an existential as well as an economic crisis.

The world’s biggest equity deal this year was to unfold in Hong Kong later this month but has been put on hold. Banks are issuing unprecedented profit warnings, while hotels and restaurants are half-empty. Several global events have been postponed and economists say retail sales could drop by 20%-30% this year.

Hong Kong is facing its first recession in a decade, with all its growth pillars under significant stress.

While protesters are disrupting day-to-day activities, Beijing has displayed its paramilitary might near the border, raising questions over the city’s political, financial and economic future.

“Hong Kong is facing a crisis almost unprecedented in its history,” said Edison Lee, equities analyst at Jefferies.

In the April-June quarter, when the impact of the protests was mild, the economy shrank 0.4 per cent from the previous quarter. Since then, demonstrations have spread across the territory, disrupting traffic, paralyzing shopping and tourist areas and closing down the city’s sprawling airport at times.

The third quarter is bound to confirm the recession by its technical definition of two consecutive quarters of economic contraction.

For the whole year, the government expects growth at 0-1%, but some analysts expect it to shrink. Forecasting at this juncture, given the myriad of pathways the social crisis might take, is of little value, but the contraction could be severe.

Hong Kong protests: Relatives of police officials join rally

<div class="videoWrapper trancodeVideo"><iframe allowfullscreen="" autoplay="1" class="includeVideo" frameborder="0" height="350" src="https://www.wionews.com/videos/hong-kong-protests-relatives-of-police-officials-join-rally-245581/embed" style="width:100%;max-width:560px;" width="560"></iframe></div>

“When you have a boom for so many years, and now you get a bust, the bust is going to be quite massive also,” said Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets.

Corporate warnings

Citing political unrest, China’s biggest e-commerce company Alibaba Group Holding Ltd has delayed its up to $15 billion listing in Hong Kong, two people with knowledge of the matter told Reuters earlier this week.

Bank of East Asia, after reporting a 75% plunge in first-half net profit due to writedowns in China, warned on Wednesday about the impact further protests could have on small and medium enterprises.

More than 20 other companies, including developer Henderson Land, hotel group Shangri-La Asia, Emperor Watch &amp; Jewellery, department store operator Lifestyle International and rail operator MTR Corp, said in recent earnings reports the protests have been damaging.

The Catering and Hotel Industries Employees General Union told Reuters employers had asked some of its members to take non-paid leave this month because of the downturn in business.

Yiu Si-wing, Chairman of China Travel Service (HK) Ltd, a major mainland tour operator, said revenue from room sales was set to plunge 50 per cent in August.

“Visits from mainland China that usually account for 80% of arrivals are down most as people fear for their safety,” Yiu told Reuters.

Organizers of several conferences and exhibitions are scrambling to postpone events.

Trade representatives of the world’s largest diamond trading centres have asked the organizer of the Hong Kong Jewellery and Gem Fair to postpone the high-profile event, which typically welcomes more than 54,000 visitors. The fair is due to be held in September.

BlackRock, the world’s largest asset manager, has postponed a two-day September conference at the Four Seasons Hotel until February “so that as many partners as possible from across Asia are able to join.”

On Thursday, the Hong Kong Retail Management Association, which represents more than 8,000 businesses, urged all landlords to halve rents for six months and warned if the situation continued “many retailers may have to sack staff”.

Hands tied

Hong Kong leader Carrie Lam has repeatedly warned that protests are hurting the economy. She has consistently declined to meet any of the protesters’ core demands.

Instead, this month, she announced stimulus measures worth $2.4 billion, from subsidies for education and utilities to loan relief for small businesses.

But analysts warn that in the current climate, handouts are ineffective as firms and consumers are in no mood to spend.

With no obvious infrastructure upgrades needed, and with the government having a long track record of failing to adequately boost housing supply, analysts only expect announcements of more handouts and tax breaks at Lam’s annual policy address in October.

Since the turn of the century, every time Hong Kong’s economy got in trouble, the mainland’s economic boom or its stimulus measures came to the rescue. Now Beijing is facing its sharpest slowdown in nearly three decades and record debt.

“Hong Kong is on its own this time,” said Tommy Wu, senior economist at Oxford Economics.

Grim future

Rating agencies have raised long-term questions over the quality of Hong Kong’s governance.

But an increasingly assertive Beijing is fuelling larger concerns. Mainland regulatory scrutiny on airline Cathay Pacific over the involvement of some of its employees in the protests will affect Hong Kong’s image as a safe place for business.

A 1992 US-Hong Kong Policy Act allowing Washington to have a different customs regime with Hong Kong than with mainland China is also crucial for economic stability. For it to stand, US authorities need to see Hong Kong as sufficiently independent from Beijing, therefore movements of mainland troops at the border in Shenzhen are worrying.

But for now, the uncertainty is disruptive enough.

“The social situation tugs at all our heartstrings,” Kaisun Holdings, an investment holding company, said in a statement.

“Many investors have chosen to leave Hong Kong, and some banks and (multinationals) have started planning on moving their base to other nearby Asian cities. Kaisun Holdings may also begin to look for alternate markets for some of our service-based businesses.”

As one of the world’s most important trade and business hubs, Hong Kong was always going to struggle this year because of the escalating US-China tariff war. But after three months of anti-government protests, the semi-autonomous Chinese city, a shopper’s paradise and gourmet destination for millions of tourists each year, is facing an existential as well as an economic crisis.

As one of the world’s most important trade and business hubs, Hong Kong was always going to struggle this year because of the escalating US-China tariff war. But after three months of anti-government protests, the semi-autonomous Chinese city, a shopper’s paradise and gourmet destination for millions of tourists each year, is facing an existential as well as an economic crisis. The world’s biggest equity deal this year was to unfold in Hong Kong later this month but has been put on hold. Banks are issuing unprecedented profit warnings, while hotels and restaurants are half-empty. Several global events have been postponed and economists say retail sales could drop by 20%-30% this year. Hong Kong is facing its first recession in a decade, with all its growth pillars under significant stress. While protesters are disrupting day-to-day activities, Beijing has displayed its paramilitary might near the border, raising questions over the city’s political, financial and economic future. “Hong Kong is facing a crisis almost unprecedented in its history,” said Edison Lee, equities analyst at Jefferies. In the April-June quarter, when the impact of the protests was mild, the economy shrank 0.4 per cent from the previous quarter. Since then, demonstrations have spread across the territory, disrupting traffic, paralyzing shopping and tourist areas and closing down the city’s sprawling airport at times. The third quarter is bound to confirm the recession by its technical definition of two consecutive quarters of economic contraction. For the whole year, the government expects growth at 0-1%, but some analysts expect it to shrink. Forecasting at this juncture, given the myriad of pathways the social crisis might take, is of little value, but the contraction could be severe. Hong Kong protests: Relatives of police officials join rally “When you have a boom for so many years, and now you get a bust, the bust is going to be quite massive also,” said Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets. Corporate warnings Citing political unrest, China’s biggest e-commerce company Alibaba Group Holding Ltd has delayed its up to $15 billion listing in Hong Kong, two people with knowledge of the matter told Reuters earlier this week. Bank of East Asia, after reporting a 75% plunge in first-half net profit due to writedowns in China, warned on Wednesday about the impact further protests could have on small and medium enterprises. More than 20 other companies, including developer Henderson Land, hotel group Shangri-La Asia, Emperor Watch & Jewellery, department store operator Lifestyle International and rail operator MTR Corp, said in recent earnings reports the protests have been damaging. The Catering and Hotel Industries Employees General Union told Reuters employers had asked some of its members to take non-paid leave this month because of the downturn in business. Yiu Si-wing, Chairman of China Travel Service (HK) Ltd, a major mainland tour operator, said revenue from room sales was set to plunge 50 per cent in August. “Visits from mainland China that usually account for 80% of arrivals are down most as people fear for their safety,” Yiu told Reuters. Organizers of several conferences and exhibitions are scrambling to postpone events. Trade representatives of the world’s largest diamond trading centres have asked the organizer of the Hong Kong Jewellery and Gem Fair to postpone the high-profile event, which typically welcomes more than 54,000 visitors. The fair is due to be held in September. BlackRock, the world’s largest asset manager, has postponed a two-day September conference at the Four Seasons Hotel until February “so that as many partners as possible from across Asia are able to join.” On Thursday, the Hong Kong Retail Management Association, which represents more than 8,000 businesses, urged all landlords to halve rents for six months and warned if the situation continued “many retailers may have to sack staff”. Hands tied Hong Kong leader Carrie Lam has repeatedly warned that protests are hurting the economy. She has consistently declined to meet any of the protesters’ core demands. Instead, this month, she announced stimulus measures worth $2.4 billion, from subsidies for education and utilities to loan relief for small businesses. But analysts warn that in the current climate, handouts are ineffective as firms and consumers are in no mood to spend. With no obvious infrastructure upgrades needed, and with the government having a long track record of failing to adequately boost housing supply, analysts only expect announcements of more handouts and tax breaks at Lam’s annual policy address in October. Since the turn of the century, every time Hong Kong’s economy got in trouble, the mainland’s economic boom or its stimulus measures came to the rescue. Now Beijing is facing its sharpest slowdown in nearly three decades and record debt. “Hong Kong is on its own this time,” said Tommy Wu, senior economist at Oxford Economics. Grim future Rating agencies have raised long-term questions over the quality of Hong Kong’s governance. But an increasingly assertive Beijing is fuelling larger concerns. Mainland regulatory scrutiny on airline Cathay Pacific over the involvement of some of its employees in the protests will affect Hong Kong’s image as a safe place for business. A 1992 US-Hong Kong Policy Act allowing Washington to have a different customs regime with Hong Kong than with mainland China is also crucial for economic stability. For it to stand, US authorities need to see Hong Kong as sufficiently independent from Beijing, therefore movements of mainland troops at the border in Shenzhen are worrying. But for now, the uncertainty is disruptive enough. “The social situation tugs at all our heartstrings,” Kaisun Holdings, an investment holding company, said in a statement. “Many investors have chosen to leave Hong Kong, and some banks and (multinationals) have started planning on moving their base to other nearby Asian cities. Kaisun Holdings may also begin to look for alternate markets for some of our service-based businesses.”

Battered Hong Kong faces economic recession, existential crisis amid escalating US-China tariff war

The White House is considering cutting taxes or revering tariffs to <a href="https://www.wionews.com/business-economy/united-states-economists-expect-a-recession-in-2020-or-2021-survey-243983">head off a recession</a>, US media reported on Monday, despite President Donald Trump's insistence on the economy's health.

Senior White House officials are considering several moves to stimulate the economy including temporarily cutting the payroll tax to increase workers' monthly take-home pay, The Washington Post reported.

Also under consideration is reversing new tariffs the Trump administration imposed on Chinese goods, according to The New York Times.

The discussion is still in the early stages, and officials have not brought up the idea with Trump, who would have to seek approval from Congress, the newspapers said.

The White House disputed the reports in a statement to the Post, saying "cutting payroll taxes is not something under consideration at this time."

Trump on Sunday pushed back against talk of a looming recession after a raft of US data reports last week gave a mixed outlook for the economy.

"I'm prepared for everything. I don't think we're having a recession. We're doing tremendously well," Trump told reporters.

"And most economists say that we're not going to have a recession."

Earlier on Monday, a survey was released showing that a majority of economists expect a US recession in the next two years -- right around the time of the 2020 election in which Trump is standing for a second term.

Only two per cent of the survey's 226 respondents predicted a recession this year, but 38 per cent expected a downturn to hit in 2020 and 34 per cent in 2021, according to the polls from the National Association for Business Economists.

Payroll taxes were cut temporarily during President Barack Obama's term in 2011 and 2012, to counteract a sluggish recovery from the 2008 recession.

The White House is considering cutting taxes or revering tariffs to head off a recession, US media reported on Monday, despite President Donald Trump's insistence on the economy's health.

The White House is considering cutting taxes or revering tariffs to head off a recession, US media reported on Monday, despite President Donald Trump's insistence on the economy's health. Senior White House officials are considering several moves to stimulate the economy including temporarily cutting the payroll tax to increase workers' monthly take-home pay, The Washington Post reported. Also under consideration is reversing new tariffs the Trump administration imposed on Chinese goods, according to The New York Times. The discussion is still in the early stages, and officials have not brought up the idea with Trump, who would have to seek approval from Congress, the newspapers said. The White House disputed the reports in a statement to the Post, saying "cutting payroll taxes is not something under consideration at this time." Trump on Sunday pushed back against talk of a looming recession after a raft of US data reports last week gave a mixed outlook for the economy. "I'm prepared for everything. I don't think we're having a recession. We're doing tremendously well," Trump told reporters. "And most economists say that we're not going to have a recession." Earlier on Monday, a survey was released showing that a majority of economists expect a US recession in the next two years -- right around the time of the 2020 election in which Trump is standing for a second term. Only two per cent of the survey's 226 respondents predicted a recession this year, but 38 per cent expected a downturn to hit in 2020 and 34 per cent in 2021, according to the polls from the National Association for Business Economists. Payroll taxes were cut temporarily during President Barack Obama's term in 2011 and 2012, to counteract a sluggish recovery from the 2008 recession.

White House mulling tax cut to avoid recession: Report

A majority of <a href="https://www.wionews.com/world/white-house-says-no-recession-in-sight-pushes-china-trade-talks-243949">economists</a> expect a <a href="https://www.wionews.com/world/global-stocks-routed-oil-sinks-as-bond-markets-flash-recession-warning-243073">US recession</a> in the next two years but have pushed back the onset amid <a href="https://www.wionews.com/world/recession-could-hit-us-in-less-than-a-year-if-china-trade-war-worsens-survey-223893">Federal Reserve actions</a>, according to a survey released Monday.&nbsp;

The National Association for Business Economists&nbsp;found far fewer experts now think the next recession will start this year compared to a survey in February.

NABE conducted its policy poll as President Donald Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31.&nbsp;

However, the Fed was already sending strong signals that it intended to pull back on the rate increases made in 2018 due to concerns starting to dog the economic outlook, including the trade war with China.

"Survey respondents indicate that the expansion will be extended by the shift in monetary policy," said NABE President Constance Hunter, who is chief economist at KPMG.

Only two per cent of the 226 respondents now see a recession this year, compared to 10 per cent in February's survey, NABE said.

However, "the panel is split regarding whether the downturn will hit in 2020 or 2021, Hunter said in a summary of the survey, which showed 38 per cent expect a contraction of growth next year,&nbsp;while 34 per cent doesn't see it until the following year.&nbsp;

More economists shifted their recession prediction to 2021, narrowing the gap from the prior report, which had many more expecting the change next year.

The results show 46 per cent expect at least one more rate cut this year from the Fed, while about a third see policy holding where it is now, with 2.25 per cent as the top end of the policy range.

Economists are skeptical about a resolution to Trump's trade wars, although 64 per cent said a "superficial agreement is possible," NABE said.

But that was before Trump announced another round of tariffs of 10 per cent on the remaining $300 billion in goods not yet hit by US punitive duties. The new measures will take effect in two stages, on September 1 and December 15.

As Trump continues his vocal campaign criticizing the Fed, the NABE survey found economists are concerned about the impact: 55 per cent said his remarks do not influence Fed decisions but do "compromise the public's trust in the central bank."&nbsp;

And over a quarter of respondents said the criticism will "cause the Fed to be more dovish than otherwise, thus threatening its independence."

The survey also asked about fiscal policy, and a majority of economists said Trump's tax cuts "had an overall negative impact on housing activity over the past 18 months," due to changes in deductions allowed for mortgage interest.

A majority of economists expect a US recession in the next two years but have pushed back the onset amid Federal Reserve actions, according to a survey released Monday.

A majority of economists expect a US recession in the next two years but have pushed back the onset amid Federal Reserve actions, according to a survey released Monday. The National Association for Business Economists found far fewer experts now think the next recession will start this year compared to a survey in February. NABE conducted its policy poll as President Donald Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31. However, the Fed was already sending strong signals that it intended to pull back on the rate increases made in 2018 due to concerns starting to dog the economic outlook, including the trade war with China. "Survey respondents indicate that the expansion will be extended by the shift in monetary policy," said NABE President Constance Hunter, who is chief economist at KPMG. Only two per cent of the 226 respondents now see a recession this year, compared to 10 per cent in February's survey, NABE said. However, "the panel is split regarding whether the downturn will hit in 2020 or 2021, Hunter said in a summary of the survey, which showed 38 per cent expect a contraction of growth next year, while 34 per cent doesn't see it until the following year. More economists shifted their recession prediction to 2021, narrowing the gap from the prior report, which had many more expecting the change next year. The results show 46 per cent expect at least one more rate cut this year from the Fed, while about a third see policy holding where it is now, with 2.25 per cent as the top end of the policy range. Economists are skeptical about a resolution to Trump's trade wars, although 64 per cent said a "superficial agreement is possible," NABE said. But that was before Trump announced another round of tariffs of 10 per cent on the remaining $300 billion in goods not yet hit by US punitive duties. The new measures will take effect in two stages, on September 1 and December 15. As Trump continues his vocal campaign criticizing the Fed, the NABE survey found economists are concerned about the impact: 55 per cent said his remarks do not influence Fed decisions but do "compromise the public's trust in the central bank." And over a quarter of respondents said the criticism will "cause the Fed to be more dovish than otherwise, thus threatening its independence." The survey also asked about fiscal policy, and a majority of economists said Trump's tax cuts "had an overall negative impact on housing activity over the past 18 months," due to changes in deductions allowed for mortgage interest.

United States economists expect a recession in 2020 or 2021: Survey

White House officials pushed back on Sunday against concerns that economic growth may be faltering, saying they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States.

Trump administration economic adviser Larry Kudlow said trade deputies from the two countries would speak within 10 days and "if those deputies meetings pan out...we are planning to have China come to the USA" to advance negotiations over ending a trade battle that has emerged as a potential risk to global economic growth.

But even with the stalks stalled for now and the threat of greater tariffs and other trade restrictions hanging over the world economy, Kudlow said on "Fox News Sunday" the United States remained "in pretty good shape."

"There is no recession in sight," Kudlow said. "Consumers are working. Their wages are rising. They are spending and they are saving."

His comments follow a rocky week in which concerns about a possible US recession began to drive financial markets and seemed to put administration officials on edge about whether the economy would hold up through the 2020 presidential election campaign. Democrats on Sunday argued Trump's trade policies are now posing an acute, short-term risk.

US stock markets tanked last week on recession fears with all three major US indexes closing down about 3% on Wednesday only to pair their losses by Friday due to expectations the European Central Bank might cut rates.

The Fed and 19 other central banks have already loosened monetary policy in what Fitch Ratings last week described as the largest shift since the 2009 recession.

Markets are expecting even more cuts to come. For a brief time last week bond investors demanded a higher interest rate on 2-year Treasury bonds than for 10-year Treasury bonds, a potential signal of lost faith in near-term economic growth.

Much of the uncertainty surrounds prospects for a resolution of the trade tensions between the United States and China.

The administration last week delayed the imposition of some of its planned tariffs to avoid disrupting the upcoming Christmas shopping season. President Donald Trump told reporters he had a call with China’s President Xi Jinping scheduled soon. It had not taken place as of Saturday night.

Trade adviser Peter Navarro on Sunday dismissed last week's market volatility as any sort of warning sign, saying "good" economic dynamics were encouraging investors to move money to the United States.

"We have the strongest economy in the world and money is coming here for our stock market. It's also coming here to chase yield in our bond markets," Navarro told ABC's "This Week."

For bond markets, the sort of movement Navarro described is often driven by trouble - in this case the possibility that the trade battle with China is lasting far longer than expected and becoming disruptive to business investment and growth.

Still, Navarro said the tariffs on Chinese goods, "are not hurting anybody here."

The US economy does continue to grow and add jobs each month. Retail sales in July jumped a stronger-than-expected 0.7%, the government reported last week, and Kudlow said that number showed that the main prop of the US economy is intact.

But manufacturing growth has slowed and lagging business investment has become a drag. Globally, flagging trade flows have pushed the German economy toward recession, and dampened growth in China.

A slowdown would be bad news for Trump, who is building his 2020 bid for a second term around the economy's performance. He told voters at a rally last week they had "no choice" but to vote for him to preserve their jobs and investments.

Despite talking up the economy, the president and his advisers have repeatedly accused the Fed of undermining the administration's economic policies. On Sunday, Kudlow again pointed the finger at the central bank, describing rate hikes through 2017 and 2018 as "very severe monetary restraint."

The Fed hiked rates seven times over those two years as part of a plan to restore normal monetary policy following the emergency steps taken to battle the 2007-2009 global financial crisis and recession.

Even with those steps, the Fed's target interest rate has remained well below historic norms, and policymakers have started cutting rates in response to growing global risks.

Democratic presidential candidates on Sunday joined the many economic analysts who have said the administration's sometimes erratic policies on trade -- at one point threatening tariffs on Mexico over immigration issues -- are to blame for increased uncertainty, disappointing business investment and market volatility.

“I’m afraid that this president is driving the global economy and our economy into recession," Democratic candidate Beto O’Rourke said on NBC's "Meet the Press."

Speaking to CNN's "State of the Union" on Sunday, Democratic South Bend, Indiana Mayor Pete Buttigieg criticized the administration for failing to deliver a deal with China.

"There is clearly no strategy for dealing with the trade war in a way that will lead to results for American farmers, or American consumers," he said.

White House officials pushed back on Sunday against concerns that economic growth may be faltering, saying they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States.

White House officials pushed back on Sunday against concerns that economic growth may be faltering, saying they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States. Trump administration economic adviser Larry Kudlow said trade deputies from the two countries would speak within 10 days and "if those deputies meetings pan out...we are planning to have China come to the USA" to advance negotiations over ending a trade battle that has emerged as a potential risk to global economic growth. But even with the stalks stalled for now and the threat of greater tariffs and other trade restrictions hanging over the world economy, Kudlow said on "Fox News Sunday" the United States remained "in pretty good shape." "There is no recession in sight," Kudlow said. "Consumers are working. Their wages are rising. They are spending and they are saving." His comments follow a rocky week in which concerns about a possible US recession began to drive financial markets and seemed to put administration officials on edge about whether the economy would hold up through the 2020 presidential election campaign. Democrats on Sunday argued Trump's trade policies are now posing an acute, short-term risk. US stock markets tanked last week on recession fears with all three major US indexes closing down about 3% on Wednesday only to pair their losses by Friday due to expectations the European Central Bank might cut rates. The Fed and 19 other central banks have already loosened monetary policy in what Fitch Ratings last week described as the largest shift since the 2009 recession. Markets are expecting even more cuts to come. For a brief time last week bond investors demanded a higher interest rate on 2-year Treasury bonds than for 10-year Treasury bonds, a potential signal of lost faith in near-term economic growth. Much of the uncertainty surrounds prospects for a resolution of the trade tensions between the United States and China. The administration last week delayed the imposition of some of its planned tariffs to avoid disrupting the upcoming Christmas shopping season. President Donald Trump told reporters he had a call with China’s President Xi Jinping scheduled soon. It had not taken place as of Saturday night. Trade adviser Peter Navarro on Sunday dismissed last week's market volatility as any sort of warning sign, saying "good" economic dynamics were encouraging investors to move money to the United States. "We have the strongest economy in the world and money is coming here for our stock market. It's also coming here to chase yield in our bond markets," Navarro told ABC's "This Week." For bond markets, the sort of movement Navarro described is often driven by trouble - in this case the possibility that the trade battle with China is lasting far longer than expected and becoming disruptive to business investment and growth. Still, Navarro said the tariffs on Chinese goods, "are not hurting anybody here." The US economy does continue to grow and add jobs each month. Retail sales in July jumped a stronger-than-expected 0.7%, the government reported last week, and Kudlow said that number showed that the main prop of the US economy is intact. But manufacturing growth has slowed and lagging business investment has become a drag. Globally, flagging trade flows have pushed the German economy toward recession, and dampened growth in China. A slowdown would be bad news for Trump, who is building his 2020 bid for a second term around the economy's performance. He told voters at a rally last week they had "no choice" but to vote for him to preserve their jobs and investments. Despite talking up the economy, the president and his advisers have repeatedly accused the Fed of undermining the administration's economic policies. On Sunday, Kudlow again pointed the finger at the central bank, describing rate hikes through 2017 and 2018 as "very severe monetary restraint." The Fed hiked rates seven times over those two years as part of a plan to restore normal monetary policy following the emergency steps taken to battle the 2007-2009 global financial crisis and recession. Even with those steps, the Fed's target interest rate has remained well below historic norms, and policymakers have started cutting rates in response to growing global risks. Democratic presidential candidates on Sunday joined the many economic analysts who have said the administration's sometimes erratic policies on trade -- at one point threatening tariffs on Mexico over immigration issues -- are to blame for increased uncertainty, disappointing business investment and market volatility. “I’m afraid that this president is driving the global economy and our economy into recession," Democratic candidate Beto O’Rourke said on NBC's "Meet the Press." Speaking to CNN's "State of the Union" on Sunday, Democratic South Bend, Indiana Mayor Pete Buttigieg criticized the administration for failing to deliver a deal with China. "There is clearly no strategy for dealing with the trade war in a way that will lead to results for American farmers, or American consumers," he said.

White House says no recession in sight, pushes China trade talks

<a href="https://www.wionews.com/world/oil-rises-after-iran-says-it-seized-foreign-tanker-in-gulf-236913">Crude oil prices rose</a> more than 2 per cent on Friday, recovering from two days of declines after data showing a rise in US retail sales helped to ease concerns about a recession in the world's biggest economy.

Brent crude was up 2 per cent at $59.48 a barrel at 0924 GMT, after falling 2.1 per cent on Thursday and 3 per cent the previous day.&nbsp;

US crude was also 2 per cent higher at $55.60 a barrel, having dropped 1.4 per cent in the previous session and 3.3 per cent on Wednesday.

US retail sales rose 0.7 per cent in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, Thursday's data showed.

That came a day after a sell-off in world markets that followed the US Treasury yield curve's first inversion since June 2007 - a development usually seen as a reliable predictor of a looming recession.

"The rebound has a corrective look about it on thin volumes, rather than a beachhead for an impending rebound," said Jeffrey Halley, senior market analyst at OANDA.&nbsp;

"Overall, US data continues to be a bright spot in a dark economic universe."

World stocks also rose on Friday as expectations grew for further stimulus by central banks, offsetting worries about slowing economic growth.

Gains are likely to be capped after a week of data releases included a surprise drop in industrial output growth in China to a more than 17-year low and a fall in exports that sent Germany's economy into reverse in the second quarter.

"The broader story around global economic growth has been a weak one, or a weakening one, and expectations (are for) further weakening," said Phin Ziebell, senior economist at National Australia Bank.

The price of Brent is still up nearly 10 per cent this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, a group known as OPEC+.

In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices.

"At what point will further output cuts be needed at the back end of this year from OPEC and Russia to keep things going the way they are?" Ziebell said.

A Saudi official indicated this month that more steps may be coming, saying Saudi Arabia was committed to doing "whatever it takes" to keep the market balanced next year.

OPEC's efforts have been undermined by worries about a slowing global economy amid a trade dispute between the United States and China, as well as rising US stockpiles of crude and higher output of US shale oil.

Crude oil prices rose more than 2 per cent on Friday, recovering from two days of declines after data showing a rise in US retail sales helped to ease concerns about a recession in the world's biggest economy.

Crude oil prices rose more than 2 per cent on Friday, recovering from two days of declines after data showing a rise in US retail sales helped to ease concerns about a recession in the world's biggest economy. Brent crude was up 2 per cent at $59.48 a barrel at 0924 GMT, after falling 2.1 per cent on Thursday and 3 per cent the previous day. US crude was also 2 per cent higher at $55.60 a barrel, having dropped 1.4 per cent in the previous session and 3.3 per cent on Wednesday. US retail sales rose 0.7 per cent in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, Thursday's data showed. That came a day after a sell-off in world markets that followed the US Treasury yield curve's first inversion since June 2007 - a development usually seen as a reliable predictor of a looming recession. "The rebound has a corrective look about it on thin volumes, rather than a beachhead for an impending rebound," said Jeffrey Halley, senior market analyst at OANDA. "Overall, US data continues to be a bright spot in a dark economic universe." World stocks also rose on Friday as expectations grew for further stimulus by central banks, offsetting worries about slowing economic growth. Gains are likely to be capped after a week of data releases included a surprise drop in industrial output growth in China to a more than 17-year low and a fall in exports that sent Germany's economy into reverse in the second quarter. "The broader story around global economic growth has been a weak one, or a weakening one, and expectations (are for) further weakening," said Phin Ziebell, senior economist at National Australia Bank. The price of Brent is still up nearly 10 per cent this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, a group known as OPEC+. In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices. "At what point will further output cuts be needed at the back end of this year from OPEC and Russia to keep things going the way they are?" Ziebell said. A Saudi official indicated this month that more steps may be coming, saying Saudi Arabia was committed to doing "whatever it takes" to keep the market balanced next year. OPEC's efforts have been undermined by worries about a slowing global economy amid a trade dispute between the United States and China, as well as rising US stockpiles of crude and higher output of US shale oil.

Oil rises 2% as recession fears recede

The odds of a US <a href="https://www.wionews.com/world/us-china-trade-setback-stokes-recession-fears-stocks-slide-218396">recession by next year</a> have increased sharply, with mounting protectionism continuing to pose the greatest economic threat, according to a business economic survey Monday.

Nearly all the respondents to the quarterly survey from the National Association for Business Economics predicted growth would slow in 2019 but were moderately less gloomy about the risks to their outlook.

However, the poll of 53 economic forecasters from major US corporations and universities was conducted in the first half of May, just as US trade relations with China took a sudden turn for the worse but before US President Donald Trump's latest threat to impose new tariffs on Mexico in a dispute over migration starting at five percent and quickly increasing to 25 per cent.

"Increased trade protectionism is considered the primary downside risk to growth by a majority of respondents, followed by financial market strains and a global growth slowdown," Gregory Daco of Oxford Economics, who chaired the survey, said in the report.

"Recession risks are perceived to be low in the near term but to rise rapidly in 2020." The panellists put the odds at 60 per cent for a US recession before the end of 2020 — nearly double the 35 per cent forecast in the survey three months ago.

Nearly 90 per cent of respondents said they had cut their growth forecasts in recent months due to US trade policy, which has involved battles with all major US trading partners, but even so the overall consensus for this year and next are a bit higher than the last survey.

Panellists now expect GDP growth to fall to 2.6 per cent this year and 2.1 per cent by next year, from 2.9 per cent at the end of 2018. Most, or 60 per cent, said the balance of risks was weighted to the downside but this was down from 74 per cent in the previous survey.

The odds of a US recession by next year have increased sharply, with mounting protectionism continuing to pose the greatest economic threat, according to a business economic survey Monday.

The odds of a US recession by next year have increased sharply, with mounting protectionism continuing to pose the greatest economic threat, according to a business economic survey Monday. Nearly all the respondents to the quarterly survey from the National Association for Business Economics predicted growth would slow in 2019 but were moderately less gloomy about the risks to their outlook. However, the poll of 53 economic forecasters from major US corporations and universities was conducted in the first half of May, just as US trade relations with China took a sudden turn for the worse but before US President Donald Trump's latest threat to impose new tariffs on Mexico in a dispute over migration starting at five percent and quickly increasing to 25 per cent. "Increased trade protectionism is considered the primary downside risk to growth by a majority of respondents, followed by financial market strains and a global growth slowdown," Gregory Daco of Oxford Economics, who chaired the survey, said in the report. "Recession risks are perceived to be low in the near term but to rise rapidly in 2020." The panellists put the odds at 60 per cent for a US recession before the end of 2020 — nearly double the 35 per cent forecast in the survey three months ago. Nearly 90 per cent of respondents said they had cut their growth forecasts in recent months due to US trade policy, which has involved battles with all major US trading partners, but even so the overall consensus for this year and next are a bit higher than the last survey. Panellists now expect GDP growth to fall to 2.6 per cent this year and 2.1 per cent by next year, from 2.9 per cent at the end of 2018. Most, or 60 per cent, said the balance of risks was weighted to the downside but this was down from 74 per cent in the previous survey.

Recession could hit US in less than a year if China trade war worsens: Survey

Global equities fell on Monday after their worst week of 2019 as hopes of an imminent US-China trade deal were crushed, raising fears of a fresh round of tit-for-tat tariffs.

The impasse left investors bracing for retaliation by China for Washington's increase on Friday of tariffs on $200 billion worth of Chinese goods. The move followed accusations by US President Donald Trump that Beijing had reneged on earlier commitments.

Trump on Monday warned China not to retaliate against an increase in tariffs he imposed last week.

Escalation could tip the US economy into recession, a risk flagged by the inversion in US Treasury bond yield curve between three-month and 10-year rates for the second time in under a week.

The US curve has inverted before each recession in the past 50 years. It gave a false signal just once.

"Overall, in the short term the chances of recession have increased so equity markets will be priced on the back of that," said Justin Oneukwusi, portfolio manager at Legal &amp; General Investment Management.

The pan-European Stoxx 600 slipped 0.5%. S&amp;P 500 futures shed 1.3%.

Chinese shares tumbled. The benchmark Shanghai Composite and the blue-chip CSI 300 indices shed 1.2% and 1.8%, respectively.

The offshore Chinese yuan fell to its lowest in more than four months, 6.88 to the dollar.

Trade talks as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any "bitter fruit" that harmed its interests.

"How far this escalates is what the market is really worried about ... The important thing is what's the impact on growth, and that's what the market is really fearing," Oneukwusi said.

White House economic adviser Larry Kudlow told Fox News that China needed to agree to "very strong" enforcement provisions to secure a deal. He said the sticking point was Beijing's reluctance to put into law changes that had been agreed.

Kudlow said US tariffs would remain in place while negotiations continued and Trump was likely to meet Chinese President Xi Jinping at a G20 summit in Japan in late June.

"The risk of a full-blown trade war has materially increased, even though both sides seem to still want a trade deal and talks are expected to continue," UBS economist Tao Wang said.

Washington said it was preparing to raise tariffs on all remaining imports from China, worth about $300 billion.

"Our base case is for limited progress and Chinese retaliation," said Michael Hanson, head of global macro strategy at TD Securities.

Major currencies were relatively calm. The euro was steady at $1.1234 and the dollar little changed against a basket of currencies at 97.270.

"We've seen pretty restrained moves among currencies, despite some severe rhetoric between the US and China so far. However, cause for concern remains a weaker yuan, which should be a warning sign for risk assets," said Marc-André Fongern of MAF Global Forex.

Emerging-market stocks were down 0.9 per cent, hovering near January lows. JPMorgan said it had reduced its emerging-markets risk for the second time in as many months on Monday following the setback in US-China trade talks.

In commodities, oil futures jumped on growing concern about supply disruptions in the Middle East. Brent crude futures rose 1.8% to $71.90 a barrel and US West Texas Intermediate futures were up 1.5% at $62.56 per barrel.

In digital currencies, Bitcoin hovered above $7,000 on Monday, close to nine-month highs, as the biggest cryptocurrency's 2019 rally gathered steam.

Global equities fell on Monday after their worst week of 2019 as hopes of an imminent US-China trade deal were crushed, raising fears of a fresh round of tit-for-tat tariffs.

Global equities fell on Monday after their worst week of 2019 as hopes of an imminent US-China trade deal were crushed, raising fears of a fresh round of tit-for-tat tariffs. The impasse left investors bracing for retaliation by China for Washington's increase on Friday of tariffs on $200 billion worth of Chinese goods. The move followed accusations by US President Donald Trump that Beijing had reneged on earlier commitments. Trump on Monday warned China not to retaliate against an increase in tariffs he imposed last week. Escalation could tip the US economy into recession, a risk flagged by the inversion in US Treasury bond yield curve between three-month and 10-year rates for the second time in under a week. The US curve has inverted before each recession in the past 50 years. It gave a false signal just once. "Overall, in the short term the chances of recession have increased so equity markets will be priced on the back of that," said Justin Oneukwusi, portfolio manager at Legal & General Investment Management. The pan-European Stoxx 600 slipped 0.5%. S&P 500 futures shed 1.3%. Chinese shares tumbled. The benchmark Shanghai Composite and the blue-chip CSI 300 indices shed 1.2% and 1.8%, respectively. The offshore Chinese yuan fell to its lowest in more than four months, 6.88 to the dollar. Trade talks as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any "bitter fruit" that harmed its interests. "How far this escalates is what the market is really worried about ... The important thing is what's the impact on growth, and that's what the market is really fearing," Oneukwusi said. White House economic adviser Larry Kudlow told Fox News that China needed to agree to "very strong" enforcement provisions to secure a deal. He said the sticking point was Beijing's reluctance to put into law changes that had been agreed. Kudlow said US tariffs would remain in place while negotiations continued and Trump was likely to meet Chinese President Xi Jinping at a G20 summit in Japan in late June. "The risk of a full-blown trade war has materially increased, even though both sides seem to still want a trade deal and talks are expected to continue," UBS economist Tao Wang said. Washington said it was preparing to raise tariffs on all remaining imports from China, worth about $300 billion. "Our base case is for limited progress and Chinese retaliation," said Michael Hanson, head of global macro strategy at TD Securities. Major currencies were relatively calm. The euro was steady at $1.1234 and the dollar little changed against a basket of currencies at 97.270. "We've seen pretty restrained moves among currencies, despite some severe rhetoric between the US and China so far. However, cause for concern remains a weaker yuan, which should be a warning sign for risk assets," said Marc-André Fongern of MAF Global Forex. Emerging-market stocks were down 0.9 per cent, hovering near January lows. JPMorgan said it had reduced its emerging-markets risk for the second time in as many months on Monday following the setback in US-China trade talks. In commodities, oil futures jumped on growing concern about supply disruptions in the Middle East. Brent crude futures rose 1.8% to $71.90 a barrel and US West Texas Intermediate futures were up 1.5% at $62.56 per barrel. In digital currencies, Bitcoin hovered above $7,000 on Monday, close to nine-month highs, as the biggest cryptocurrency's 2019 rally gathered steam.

US-China trade setback stokes recession fears; stocks slide

Turkey voted in local elections on Sunday in a test for President Recep Tayyip Erdogan, with his ruling party fighting to keep hold of the country's two key cities as an economic slowdown takes hold.

Erdogan and his Justice and Development Party (AKP) have won every vote since the party first came to power in 2002 but this time, analysts say, the party risks losing Turkey's capital Ankara and even its economic hub Istanbul.

Sunday's poll was the first municipal ballot since Turks approved constitutional reforms in 2017 to create an executive presidency that gave Erdogan wider powers after a decade and a half in office.

But Erdogan, whose ability to win continuously at the ballot box is unparalleled in Turkish history, appears more vulnerable with the country's economy in recession, unemployment up and inflation in double digits.

Voting closed at 1400 GMT in Sunday's ballot, which was held mostly without incident, with the exception of the deaths of two men killed in a fight at a polling station in the east of Turkey.

Much of the AKP's success has been down to his perceived economic prowess, but days before the vote, the Turkish lira was sliding again, provoking memories of the 2018 currency crisis that badly hurt Turkish households.

Erdogan, who began his own political career as Istanbul mayor, personally campaigned hard across Turkey, often with several rallies a day, even though he is not on the ballot.

Looking to galvanize his base among conservative Turks, the president cast the election as a matter of survival, attacking opposition candidates by branding them as linked to PKK Kurdish militants.

"The economy is terrible," said Husnu Acar, 53, after voting in a school in Beylikduzu on the outskirts of Istanbul.

"They are the ones with a survival problem," he said of the AKP.

Voters are to elect scores of mayors, municipal councils and other local officials. Preliminary results are expected soon after polls close with official results released early in the week.

Two members of Saadet (Felicity), a religiously conservative party, were killed after an attack by an AKP candidate's nephew in a polling station in Malatya, eastern Turkey, Saadet chairman Temel Karamollaoglu said on Twitter.&nbsp;

The two men, one of whom was also an election observer, died after a fight between two groups in Puturge district, private DHA news agency reported. The Malatya governorate said four individuals were detained.

Erdogan said the incident was "upsetting" after he voted in Istanbul, and he called Karamollaoglu shortly afterwards to offer his condolences, the presidency said.

Charges of an unfair vote 
For his supporters, Erdogan remains the strong leader they believe Turkey needs and they tout the country's economic development over the 16 years he and the AKP have been in power.&nbsp;

But rights activists and even Turkey's Western allies say that under his leadership, democracy has been eroded, particularly after a failed 2016 coup that led to tens of thousands of people being arrested.

"The economy isn't doing so good for sure, but I have confidence in our president and things will be better after the election," said Koksal Karacan, a retiree voting in Istanbul's Kasimpasa, where Erdogan grew up.

The vote will be the first time since 2002 that the AKP is fielding candidates with its alliance partner, the rightwing Nationalist Movement Party (MHP).

The opposition pro-Kurdish Peoples' Democratic Party (HDP) has refused to field candidates in several cities, saying the elections are unfair. Some of its leaders have been jailed on terror charges, accusations they reject.

The HDP criticised the detentions of candidates and its members in the run-up to the vote in a statement on Sunday, accusing the government of trying "to paralyse the HDP organisationally, and render the playing field even more uneven".

Observers say that with most media either pro-government or controlled by the president's supporters, opposition parties campaigned at a disadvantage because Erdogan's daily rallies dominated TV coverage.

"What has happened during the campaign for Sunday's local elections is unprecedented and demonstrates that — unlike during its first years in power — the AKP is no longer confident of being able to win a fair election," said Gareth Jenkins, a non-resident senior research fellow at the Silk Road Studies Programme.

'Boss of the economy' 
In Istanbul, where the race is expected to be tight, Erdogan has fielded one of his loyalists, former prime minister Binali Yildirim.

But in Ankara, Mansur Yavas — the candidate for both the opposition Republican People's Party or CHP and the nationalist Good Party — might have a stronger chance of winning, according to a number of recent polls.

With inflation at just under 20 percent and unemployment at a near 10-year high in December, Erdogan has sought to reassure voters about the economy.

"I am the boss of the economy right now as the president of this country," Erdogan told a rally on Saturday.

Turkey's finance minister, Berat Albayrak, who is Erdogan's son-in-law, said economic reforms would be announced the week of April 8.

Turkey voted in local elections on Sunday in a test for President Recep Tayyip Erdogan, with his ruling party fighting to keep hold of the country's two key cities as an economic slowdown takes hold.

Turkey voted in local elections on Sunday in a test for President Recep Tayyip Erdogan, with his ruling party fighting to keep hold of the country's two key cities as an economic slowdown takes hold. Erdogan and his Justice and Development Party (AKP) have won every vote since the party first came to power in 2002 but this time, analysts say, the party risks losing Turkey's capital Ankara and even its economic hub Istanbul. Sunday's poll was the first municipal ballot since Turks approved constitutional reforms in 2017 to create an executive presidency that gave Erdogan wider powers after a decade and a half in office. But Erdogan, whose ability to win continuously at the ballot box is unparalleled in Turkish history, appears more vulnerable with the country's economy in recession, unemployment up and inflation in double digits. Voting closed at 1400 GMT in Sunday's ballot, which was held mostly without incident, with the exception of the deaths of two men killed in a fight at a polling station in the east of Turkey. Much of the AKP's success has been down to his perceived economic prowess, but days before the vote, the Turkish lira was sliding again, provoking memories of the 2018 currency crisis that badly hurt Turkish households. Erdogan, who began his own political career as Istanbul mayor, personally campaigned hard across Turkey, often with several rallies a day, even though he is not on the ballot. Looking to galvanize his base among conservative Turks, the president cast the election as a matter of survival, attacking opposition candidates by branding them as linked to PKK Kurdish militants. "The economy is terrible," said Husnu Acar, 53, after voting in a school in Beylikduzu on the outskirts of Istanbul. "They are the ones with a survival problem," he said of the AKP. Voters are to elect scores of mayors, municipal councils and other local officials. Preliminary results are expected soon after polls close with official results released early in the week. Two members of Saadet (Felicity), a religiously conservative party, were killed after an attack by an AKP candidate's nephew in a polling station in Malatya, eastern Turkey, Saadet chairman Temel Karamollaoglu said on Twitter. The two men, one of whom was also an election observer, died after a fight between two groups in Puturge district, private DHA news agency reported. The Malatya governorate said four individuals were detained. Erdogan said the incident was "upsetting" after he voted in Istanbul, and he called Karamollaoglu shortly afterwards to offer his condolences, the presidency said. Charges of an unfair vote For his supporters, Erdogan remains the strong leader they believe Turkey needs and they tout the country's economic development over the 16 years he and the AKP have been in power. But rights activists and even Turkey's Western allies say that under his leadership, democracy has been eroded, particularly after a failed 2016 coup that led to tens of thousands of people being arrested. "The economy isn't doing so good for sure, but I have confidence in our president and things will be better after the election," said Koksal Karacan, a retiree voting in Istanbul's Kasimpasa, where Erdogan grew up. The vote will be the first time since 2002 that the AKP is fielding candidates with its alliance partner, the rightwing Nationalist Movement Party (MHP). The opposition pro-Kurdish Peoples' Democratic Party (HDP) has refused to field candidates in several cities, saying the elections are unfair. Some of its leaders have been jailed on terror charges, accusations they reject. The HDP criticised the detentions of candidates and its members in the run-up to the vote in a statement on Sunday, accusing the government of trying "to paralyse the HDP organisationally, and render the playing field even more uneven". Observers say that with most media either pro-government or controlled by the president's supporters, opposition parties campaigned at a disadvantage because Erdogan's daily rallies dominated TV coverage. "What has happened during the campaign for Sunday's local elections is unprecedented and demonstrates that — unlike during its first years in power — the AKP is no longer confident of being able to win a fair election," said Gareth Jenkins, a non-resident senior research fellow at the Silk Road Studies Programme. 'Boss of the economy' In Istanbul, where the race is expected to be tight, Erdogan has fielded one of his loyalists, former prime minister Binali Yildirim. But in Ankara, Mansur Yavas — the candidate for both the opposition Republican People's Party or CHP and the nationalist Good Party — might have a stronger chance of winning, according to a number of recent polls. With inflation at just under 20 percent and unemployment at a near 10-year high in December, Erdogan has sought to reassure voters about the economy. "I am the boss of the economy right now as the president of this country," Erdogan told a rally on Saturday. Turkey's finance minister, Berat Albayrak, who is Erdogan's son-in-law, said economic reforms would be announced the week of April 8.

Turks vote in test for Erdogan as recession hits home

The Italian economy contracted in the fourth quarter of 2018, plunging the country into a technical recession, official data showed Thursday.

The 0.2 per cent contraction — following a 0.1 per cent fall in the third quarter — will put pressure on the populist government in the eurozone's third-largest economy, which took power in June on the back of big-spending electoral promises.

Italy's Prime Minister Giuseppe Conte had anticipated the bad news on Wednesday during a business conference in Milan.

"Analysts tell us we'll likely still suffer a bit at the start of this year," he said, pointing the finger at a slowdown in China and Germany which are hurting Italian exports.

"But all the elements are there to recover in the second half," Conte added.

The coalition government of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its ambitious and costly budget in December to avoid being punished by the European Commission and the financial markets.

A slowdown will make it even harder to follow through on expensive vote-winning measures both parties promised their bases, from reform to the pension system and income support for the poor.

Thursday's data "reflect a marked worsening of the industrial sector's performance, and of a negative contribution of agriculture," national statistics institute Istat said.

The institute had earlier released December's unemployment rate, which fell to 10.3 per cent from 10.5 per cent, a positive sign. The jobless numbers rose 0.1 per cent for young people aged 15 to 24, however, bringing the rate to 31.9 per cent.

The Italian economy contracted in the fourth quarter of 2018, plunging the country into a technical recession, official data showed Thursday. The 0.2 per cent contraction — following a 0.

The Italian economy contracted in the fourth quarter of 2018, plunging the country into a technical recession, official data showed Thursday. The 0.2 per cent contraction — following a 0.1 per cent fall in the third quarter — will put pressure on the populist government in the eurozone's third-largest economy, which took power in June on the back of big-spending electoral promises. Italy's Prime Minister Giuseppe Conte had anticipated the bad news on Wednesday during a business conference in Milan. "Analysts tell us we'll likely still suffer a bit at the start of this year," he said, pointing the finger at a slowdown in China and Germany which are hurting Italian exports. "But all the elements are there to recover in the second half," Conte added. The coalition government of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its ambitious and costly budget in December to avoid being punished by the European Commission and the financial markets. A slowdown will make it even harder to follow through on expensive vote-winning measures both parties promised their bases, from reform to the pension system and income support for the poor. Thursday's data "reflect a marked worsening of the industrial sector's performance, and of a negative contribution of agriculture," national statistics institute Istat said. The institute had earlier released December's unemployment rate, which fell to 10.3 per cent from 10.5 per cent, a positive sign. The jobless numbers rose 0.1 per cent for young people aged 15 to 24, however, bringing the rate to 31.9 per cent.

Italy in recession after economy shrinks in Q4 2018

Part of the US Treasury yield curve "inverted" this week, setting off debate over whether it is delivering a classic signal of oncoming recession or it has just developed a short-term kink that can be explained away by technical reasons.

Whatever the reason, investors and economists ignore this message from the bond market at their peril: yield curve inversions - when shorter-dated securities yield more than longer maturities - have preceded every US recession in recent memory by anywhere from 15 months to around two years.

"The yield curve has sent a chill down investors' spines in regard to the future outlook of the US economy," said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in New Jersey. "It's the what-if scenario."

To be sure, this week's inversion has been limited so far to the front-end of the yield curve rather than more closely studied recession harbingers such as the gap between 2-year and 10-year note yields. In the current instance, yields on five-year notes have dropped below those on both two-year and three-year securities.

Still, in December 2005, for instance, a comparable inversion at the front of the curve was followed shortly afterward by an inversion between 2- and 10-year yields. The Great Recession began in December 2007.

That pattern was also evident in late 1988 in advance of the 1990 recession. Ahead of the 2001 recession, the entire curve dropped into inversion in sync in February 2000.

TECHNICAL GLITCH OR FUNDAMENTAL WARNING?

In the current instance, investors and economists are debating whether this warns of economic weakness ahead or if it reflects other factors, such as a recent reversal of large speculative bets on declining bond prices and the Federal Reserve's large holdings of Treasuries.

A central focus is whether it means the market is second guessing the Fed, which has been raising interest rates for three years and is expected to lift them further, including at their next meeting in two weeks.

Jeffrey Gundlach, chief executive officer of DoubleLine Capital and a closely watched bond investor, comes down on the side of it being a fundamental signal. It reflects "total bond market disbelief in the Federal Reserve's prior plans to raise rates through 2019," he told Reuters.

At the same time, this week's move does coincide with an ongoing positioning shift in the Treasury market.

Hedge funds and other speculators had amassed a record level of bets on declines in Treasury prices through the futures market, with the heaviest bets lodged against 5-year maturities. But they have slashed those by more than half in the last few weeks, and that may have contributed to the out-sized rally in 5-year note prices in particular. Bond prices and yields move in opposite directions.

"A lot of it is momentum," said John Canavan, market strategist with Stone &amp; McCarthy Research Associates in New York. "I do think it's overdone with short-covering and unwinding of money-losing positions."

Another current factor that was absent in previous inversion episodes is the Fed's $3.92 trillion stockpile of bonds accumulated to soften the effects of the 2008 financial crisis. While it has been shrinking its holdings for more than a year, its bond portfolio remains the world's largest and is seen as a force in suppressing longer-dated yields.

RECORD ECONOMIC EXPANSION

Those potential explanations aside, the US economy is in the middle of its second-longest expansion on record, and economists and investors are mindful that a downturn is inevitable.

Some business sectors like auto and housing are flagging due partly to rising interest rates, while debt-laden companies have raised concerns whether they could keep up with their debt payments as borrowing costs are rising.

Fed officials have cited these developments that bear watching, but several of them have repeatedly cautioned about the inversion of yield curve as the most reliable indicator that a recession is on the horizon.

Some traders said the dramatic curve flattening may be overdone and may revert if the government's November payrolls report out on Friday were to show solid jobs and wage growth.

While the risk of the entire yield curve inverting grows in anticipation of slower domestic growth, the economy appears on sure footing due to a solid job market and mild inflation.

Last year's massive federal tax cut has bolstered business confidence, but trade tension between Washington and major US trade partners looms as a possible economic drag, analysts said.

And, even if the latest kink in the yield curve is indeed the first signal of a downturn as many suspect, it does not indicate when it will actually begin nor how severe it will be.

"It’s a sloppy predictor because at some point after yield curve inversion you could get a recession that could be one year, two year, three years," said Nicholas Colas, co-founder at DataTrek Research in New York. "And as far as what it means to markets, you could still have another very solid year after inversion."

Part of the US Treasury yield curve "inverted" this week, setting off debate over whether it is delivering a classic signal of oncoming recession or it has just developed a short-term kink that can be explained away by technical reasons.

Part of the US Treasury yield curve "inverted" this week, setting off debate over whether it is delivering a classic signal of oncoming recession or it has just developed a short-term kink that can be explained away by technical reasons. Whatever the reason, investors and economists ignore this message from the bond market at their peril: yield curve inversions - when shorter-dated securities yield more than longer maturities - have preceded every US recession in recent memory by anywhere from 15 months to around two years. "The yield curve has sent a chill down investors' spines in regard to the future outlook of the US economy," said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in New Jersey. "It's the what-if scenario." To be sure, this week's inversion has been limited so far to the front-end of the yield curve rather than more closely studied recession harbingers such as the gap between 2-year and 10-year note yields. In the current instance, yields on five-year notes have dropped below those on both two-year and three-year securities. Still, in December 2005, for instance, a comparable inversion at the front of the curve was followed shortly afterward by an inversion between 2- and 10-year yields. The Great Recession began in December 2007. That pattern was also evident in late 1988 in advance of the 1990 recession. Ahead of the 2001 recession, the entire curve dropped into inversion in sync in February 2000. TECHNICAL GLITCH OR FUNDAMENTAL WARNING? In the current instance, investors and economists are debating whether this warns of economic weakness ahead or if it reflects other factors, such as a recent reversal of large speculative bets on declining bond prices and the Federal Reserve's large holdings of Treasuries. A central focus is whether it means the market is second guessing the Fed, which has been raising interest rates for three years and is expected to lift them further, including at their next meeting in two weeks. Jeffrey Gundlach, chief executive officer of DoubleLine Capital and a closely watched bond investor, comes down on the side of it being a fundamental signal. It reflects "total bond market disbelief in the Federal Reserve's prior plans to raise rates through 2019," he told Reuters. At the same time, this week's move does coincide with an ongoing positioning shift in the Treasury market. Hedge funds and other speculators had amassed a record level of bets on declines in Treasury prices through the futures market, with the heaviest bets lodged against 5-year maturities. But they have slashed those by more than half in the last few weeks, and that may have contributed to the out-sized rally in 5-year note prices in particular. Bond prices and yields move in opposite directions. "A lot of it is momentum," said John Canavan, market strategist with Stone & McCarthy Research Associates in New York. "I do think it's overdone with short-covering and unwinding of money-losing positions." Another current factor that was absent in previous inversion episodes is the Fed's $3.92 trillion stockpile of bonds accumulated to soften the effects of the 2008 financial crisis. While it has been shrinking its holdings for more than a year, its bond portfolio remains the world's largest and is seen as a force in suppressing longer-dated yields. RECORD ECONOMIC EXPANSION Those potential explanations aside, the US economy is in the middle of its second-longest expansion on record, and economists and investors are mindful that a downturn is inevitable. Some business sectors like auto and housing are flagging due partly to rising interest rates, while debt-laden companies have raised concerns whether they could keep up with their debt payments as borrowing costs are rising. Fed officials have cited these developments that bear watching, but several of them have repeatedly cautioned about the inversion of yield curve as the most reliable indicator that a recession is on the horizon. Some traders said the dramatic curve flattening may be overdone and may revert if the government's November payrolls report out on Friday were to show solid jobs and wage growth. While the risk of the entire yield curve inverting grows in anticipation of slower domestic growth, the economy appears on sure footing due to a solid job market and mild inflation. Last year's massive federal tax cut has bolstered business confidence, but trade tension between Washington and major US trade partners looms as a possible economic drag, analysts said. And, even if the latest kink in the yield curve is indeed the first signal of a downturn as many suspect, it does not indicate when it will actually begin nor how severe it will be. "It’s a sloppy predictor because at some point after yield curve inversion you could get a recession that could be one year, two year, three years," said Nicholas Colas, co-founder at DataTrek Research in New York. "And as far as what it means to markets, you could still have another very solid year after inversion."

Is recession setting in? Analysing the inverted US yield curve

By&nbsp;Iosif Kovras 
 
It has been ten years since the global recession hit – and the perfect opportunity to rethink and reassess the crisis with the benefit of time. Much of the focus so far has been on economic or policy failures, with the question of accountability left out of the discussion. In stark contrast to the grassroots calls for punishing those responsible, political leaders were not overly concerned with accountability, leaving bankers off the hook. 
 
This was a mistake. To give only one example, in the US and the UK, this post-crisis impunity – along with other political factors – have had deleterious effects on democratic politics, setting the stage for demagogues to emerge and ride a tide of popular discontent.

Our comparative research, carried out with Kieran McEvoy Neophytos Loizides, reveals that Iceland stands out from the rest. Iceland, a tiny European nation of 330,000 inhabitants, offers valuable lessons on the importance of accountability and suggests how to deal with such issues if or when the world suffers another financial crisis.

Days after the collapse of 97 per cent of its banking industry, Icelandic authorities designed a comprehensive policy of accountability, based on two overlapping objectives: establishing the truth and punishing those responsible. An independent truth commission was mandated to document the causes of the meltdown, and the newly established Office of the Special Prosecutor was tasked to thoroughly investigate and prosecute those responsible for any crimes committed in the run-up to the crisis. Both mechanisms have been remarkably successful.

Published in 2010, the truth commission’s 2,200-page report not only documented the manifold failings of the financial system in Iceland but also offered specific recommendations to protect state institutions from a future crisis. The report instantly became a bestseller, with copies sold in supermarkets. It was a popular gift – parents even gave it to their children to help them avoid making the same mistakes.

The Office of the Special Prosecutor successfully prosecuted 40 bank executives. This is remarkable, especially given the small population of the island and the comparative experience of other European countries affected by the recession, such as Ireland, Cyprus, or the UK (table below).

Populism is based on a simplistic view that divides society between the “real people” and the “corrupt elites”. In the aftermath of a financial crisis, bank executives were often – and still are – seen as the “greedy elites”, responsible for their people’s suffering; that explains why the public finds it so hard to forgive them. By not properly investigating the causes of the crisis as has happened in Iceland, skilful demagogues elsewhere have been able to frame political elites and the judiciary as part of a corrupt establishment.

Below are four key things that Iceland did in the wake of the global recession, that others countries can learn from.

1. Establish resources for special investigations 
​​​​​​​ 
As we show in our ongoing research with Stefano Pagliari, even though the judiciary is independent, politicians can take steps to boost the effectiveness of prosecutors. Excessive or reckless risk-taking is not always punishable by law, so prosecutors must prove bankers intended to break the law. This means expertise in white collar crime is indispensable to a criminal investigation. Iceland had this capacity but most other crisis-affected countries did not.

2. When truth leads, justice follows 
 
Uncovering the truth and punishing those responsible are equally valuable objectives. But they can be mutually reinforcing only in a particular sequence: truth leads and justice follows. For example, the Icelandic commission created a safe space for participants to reveal the whole truth, premised on the understanding that their evidence would not be used in court. Bankers would have been understandably reluctant to share sensitive information about their activities had prosecutions run parallel to the commission.

A similar commission in Cyprus, comprised of three former judges and with a legalistic mandate, resulted in guarded testimonies and concealment rather than a revelation of the truth. Yet in Iceland, once the commission’s report revealed the shocking details of the banks’ failings, the ensuing momentum allowed the special prosecutor to start bringing charges.

3. Use of forensic technologies 
 
The application of forensic technologies is the real secret of Iceland’s success story. By analysing millions of data points, commissioners reconstructed patterns of activity in the lead-up to the crisis.

In addition, while Irish and Cypriot prosecutors had difficulty explaining the technical details of white-collar cases to a judge or jury, in interviews I found out that Iceland’s Office of the Special Prosecutor developed a simulator able to reconstruct banking interactions. Converting data into visuals provided sufficient clarity to ensure convictions.

4. Don’t prosecute politicians 
 
Iceland wasn’t right about everything. The most important mistake was the decision to set up a special court for the former prime minister, the first and only political leader in the Western world convicted for his role in the crisis, for “gross negligence” – failing to inform his cabinet of major developments in the crisis, which led to three national banks failing. Even politicians of the opposition now acknowledge it was a mistake that needlessly polarised Icelandic politics.

The comparative experience of other countries, such as Greece, shows that prosecuting politicians can have deleterious effects on much-needed consensus-building in times of crisis. An endless blame game will have an adverse impact on economic recovery. Political leaders should be punished in the ballot box, not in a courtroom.

Iceland’s most remarkable achievement is that demagogues have not appeared. True, other factors have played a significant role in protecting democratic politics from the emergence of populist leaders. Here I point to the country’s swift economic recovery and its electoral system.

Yet by pursuing accountability, the state signalled it was performing its duty to uphold the rule of law and, by doing so, it may have protected democratic politics for decades to come.

In a post-truth political era, a report of the Special Investigation Commission (SIC) in Iceland established the truth about the causes of the crisis. This limited “the range of permissible lies” – to cite Michael Ignatieff the famous Canadian academic – and thwarted conspiracy theories. Meanwhile, in Greece, populist politicians still contest the figures of state deficits that triggered the crisis. They maintain that deficits were artificially inflated to force Greece into external supervision. Think, for example, of the waves of indictments against the former head of the Greek statistical authority.

The policy recommendations of the commission set the stage for a comprehensive set of institutional reforms, geared at protecting democratic institutions from a future financial crisis. At the same time, the Office of the Special Prosecutor developed unparalleled expertise in white-collar crime investigation. In contrast, other European countries do not have a better capacity to investigate corporate crimes now than they did ten years ago.

The experience of Iceland shows that pursuing policies of accountability after a crisis may protect democracies from political instability and strengthen state institutions, thus protecting that country from a future crisis.

 
(Iosif Kovras is Reader in Comparative Politics, City, University of London) 
 
(This article was originally published on The Conversation. Read the <a href="https://theconversation.com/how-to-deal-with-the-next-financial-crisis-take-some-lessons-from-iceland-104354">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

By Iosif Kovras It has been ten years since the global recession hit – and the perfect opportunity to rethink and reassess the crisis with the benefit of time. Much of the focus so far has been on economic or policy failures, with the question of accountability left out of the discussion.

By Iosif Kovras It has been ten years since the global recession hit – and the perfect opportunity to rethink and reassess the crisis with the benefit of time. Much of the focus so far has been on economic or policy failures, with the question of accountability left out of the discussion. In stark contrast to the grassroots calls for punishing those responsible, political leaders were not overly concerned with accountability, leaving bankers off the hook. This was a mistake. To give only one example, in the US and the UK, this post-crisis impunity – along with other political factors – have had deleterious effects on democratic politics, setting the stage for demagogues to emerge and ride a tide of popular discontent. Our comparative research, carried out with Kieran McEvoy Neophytos Loizides, reveals that Iceland stands out from the rest. Iceland, a tiny European nation of 330,000 inhabitants, offers valuable lessons on the importance of accountability and suggests how to deal with such issues if or when the world suffers another financial crisis. Days after the collapse of 97 per cent of its banking industry, Icelandic authorities designed a comprehensive policy of accountability, based on two overlapping objectives: establishing the truth and punishing those responsible. An independent truth commission was mandated to document the causes of the meltdown, and the newly established Office of the Special Prosecutor was tasked to thoroughly investigate and prosecute those responsible for any crimes committed in the run-up to the crisis. Both mechanisms have been remarkably successful. Published in 2010, the truth commission’s 2,200-page report not only documented the manifold failings of the financial system in Iceland but also offered specific recommendations to protect state institutions from a future crisis. The report instantly became a bestseller, with copies sold in supermarkets. It was a popular gift – parents even gave it to their children to help them avoid making the same mistakes. The Office of the Special Prosecutor successfully prosecuted 40 bank executives. This is remarkable, especially given the small population of the island and the comparative experience of other European countries affected by the recession, such as Ireland, Cyprus, or the UK (table below). Populism is based on a simplistic view that divides society between the “real people” and the “corrupt elites”. In the aftermath of a financial crisis, bank executives were often – and still are – seen as the “greedy elites”, responsible for their people’s suffering; that explains why the public finds it so hard to forgive them. By not properly investigating the causes of the crisis as has happened in Iceland, skilful demagogues elsewhere have been able to frame political elites and the judiciary as part of a corrupt establishment. Below are four key things that Iceland did in the wake of the global recession, that others countries can learn from. 1. Establish resources for special investigations As we show in our ongoing research with Stefano Pagliari, even though the judiciary is independent, politicians can take steps to boost the effectiveness of prosecutors. Excessive or reckless risk-taking is not always punishable by law, so prosecutors must prove bankers intended to break the law. This means expertise in white collar crime is indispensable to a criminal investigation. Iceland had this capacity but most other crisis-affected countries did not. 2. When truth leads, justice follows Uncovering the truth and punishing those responsible are equally valuable objectives. But they can be mutually reinforcing only in a particular sequence: truth leads and justice follows. For example, the Icelandic commission created a safe space for participants to reveal the whole truth, premised on the understanding that their evidence would not be used in court. Bankers would have been understandably reluctant to share sensitive information about their activities had prosecutions run parallel to the commission. A similar commission in Cyprus, comprised of three former judges and with a legalistic mandate, resulted in guarded testimonies and concealment rather than a revelation of the truth. Yet in Iceland, once the commission’s report revealed the shocking details of the banks’ failings, the ensuing momentum allowed the special prosecutor to start bringing charges. 3. Use of forensic technologies The application of forensic technologies is the real secret of Iceland’s success story. By analysing millions of data points, commissioners reconstructed patterns of activity in the lead-up to the crisis. In addition, while Irish and Cypriot prosecutors had difficulty explaining the technical details of white-collar cases to a judge or jury, in interviews I found out that Iceland’s Office of the Special Prosecutor developed a simulator able to reconstruct banking interactions. Converting data into visuals provided sufficient clarity to ensure convictions. 4. Don’t prosecute politicians Iceland wasn’t right about everything. The most important mistake was the decision to set up a special court for the former prime minister, the first and only political leader in the Western world convicted for his role in the crisis, for “gross negligence” – failing to inform his cabinet of major developments in the crisis, which led to three national banks failing. Even politicians of the opposition now acknowledge it was a mistake that needlessly polarised Icelandic politics. The comparative experience of other countries, such as Greece, shows that prosecuting politicians can have deleterious effects on much-needed consensus-building in times of crisis. An endless blame game will have an adverse impact on economic recovery. Political leaders should be punished in the ballot box, not in a courtroom. Iceland’s most remarkable achievement is that demagogues have not appeared. True, other factors have played a significant role in protecting democratic politics from the emergence of populist leaders. Here I point to the country’s swift economic recovery and its electoral system. Yet by pursuing accountability, the state signalled it was performing its duty to uphold the rule of law and, by doing so, it may have protected democratic politics for decades to come. In a post-truth political era, a report of the Special Investigation Commission (SIC) in Iceland established the truth about the causes of the crisis. This limited “the range of permissible lies” – to cite Michael Ignatieff the famous Canadian academic – and thwarted conspiracy theories. Meanwhile, in Greece, populist politicians still contest the figures of state deficits that triggered the crisis. They maintain that deficits were artificially inflated to force Greece into external supervision. Think, for example, of the waves of indictments against the former head of the Greek statistical authority. The policy recommendations of the commission set the stage for a comprehensive set of institutional reforms, geared at protecting democratic institutions from a future financial crisis. At the same time, the Office of the Special Prosecutor developed unparalleled expertise in white-collar crime investigation. In contrast, other European countries do not have a better capacity to investigate corporate crimes now than they did ten years ago. The experience of Iceland shows that pursuing policies of accountability after a crisis may protect democracies from political instability and strengthen state institutions, thus protecting that country from a future crisis. (Iosif Kovras is Reader in Comparative Politics, City, University of London) (This article was originally published on The Conversation. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

How to deal with the next global financial crisis 

Over the last decade, the world's major economies floated themselves out of recession on oceans of easy money and low, or even negative, interest rates.

For the moment, policymakers and analysts talk of a "Goldilocks economy" in the United States, which is enjoying low unemployment, brisk growth, improved household finances and a strengthened banking system.

But with much of the pain having subsided and US interest rates steadily rising, prominent investors and economists are shining a light on the issues that could trigger the next recession.

They point not to risky subprime mortgage lending, which sparked the last crisis 10 years ago, but instead to voracious borrowing by corporations and emerging market economies.

Martin Feldstein, chief economic adviser to President Ronald Reagan, paints a grim picture where rising interest rates could pop a debt-fueled Wall Street bubble, gutting investment portfolios and consumer confidence, and causing "another long, deep downturn."

He offered some eye-watering numbers in a column in The Wall Street Journal on Thursday, warning that a drop in stock prices back to their historical averages from current dizzying heights would eliminate $10 trillion of US household wealth, slashing consumer spending by about $400 billion, and cutting two percentage points off GDP growth.

"Add in the effects on business investment, and this spending crunch would push the economy into recession," Feldstein wrote.

Neither the Federal Reserve nor Congress are in a position to do much to respond, since there is little room to cut interest rates, and the government deficit and debt are high.

Outside the United States, liabilities may also lurk under all the accumulated debt.

Billionaire investor Stanley Druckenmiller warned that dollar-denominated borrowing by emerging markets, like Turkey, Argentina and others, meant they already are facing "a shrinkage of liquidity" as the US central bank raises interest rates.

The trigger

Federal Reserve rate hikes raise borrowing costs for companies and governments, particularly those with dollar-denominated debt, and those who need to refinance.

"My assumption is one of these hikes -- I don't know which one -- is going to trigger this thing," Druckenmiller said, according to Business Insider.

Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, said: "The Fed's tightening is already rattling emerging markets."

He worries that markets have grown "too big to fail," bloated by money which poured in following the 2008 meltdown as central banks tried to stabilize the system.

Central bank balance sheets went from $5 trillion to $17 trillion in the last decade, he wrote this month in The New York Times, swelling the value of global markets to $290 trillion, or a record 360 per cent of global Gross Domestic Product.

Meanwhile, debt held by S&amp;P 500 corporations has risen to 1.5 times earnings since 2010, near peaks that preceded past recessions.&nbsp;

The typical privately-held corporation purchased by private equity investors in that time is leveraged to six times earnings, twice what a ratings agency would consider junk, according to Sharma.

"When the American markets start feeling it, the results are likely be very different from 2008 -- corporate meltdowns rather than mortgage defaults, and bond and pension funds affected before big investment banks," he warned.

Economist Joel Naroff told AFP the fading boost of December's tax cuts, combined with stagnant wage growth, could leave consumer spending "out of gas" in the next six to nine months.

With the housing market already soft, a slowdown in the real economy could be the first shoe to drop, he added, with debt-fueled market bubbles being the second.

"My view is that the next recession will be an average recession," Naroff said, but added, "The worst-case scenarios are not unreasonable to project."

 
&nbsp;

Over the last decade, the world's major economies floated themselves out of recession on oceans of easy money and low, or even negative, interest rates. For the moment, policymakers and analysts talk of a "Goldilocks economy" in the United States, which is enjoying low unemployment, brisk growth, improved household finances and a strengthened banking system.

Over the last decade, the world's major economies floated themselves out of recession on oceans of easy money and low, or even negative, interest rates. For the moment, policymakers and analysts talk of a "Goldilocks economy" in the United States, which is enjoying low unemployment, brisk growth, improved household finances and a strengthened banking system. But with much of the pain having subsided and US interest rates steadily rising, prominent investors and economists are shining a light on the issues that could trigger the next recession. They point not to risky subprime mortgage lending, which sparked the last crisis 10 years ago, but instead to voracious borrowing by corporations and emerging market economies. Martin Feldstein, chief economic adviser to President Ronald Reagan, paints a grim picture where rising interest rates could pop a debt-fueled Wall Street bubble, gutting investment portfolios and consumer confidence, and causing "another long, deep downturn." He offered some eye-watering numbers in a column in The Wall Street Journal on Thursday, warning that a drop in stock prices back to their historical averages from current dizzying heights would eliminate $10 trillion of US household wealth, slashing consumer spending by about $400 billion, and cutting two percentage points off GDP growth. "Add in the effects on business investment, and this spending crunch would push the economy into recession," Feldstein wrote. Neither the Federal Reserve nor Congress are in a position to do much to respond, since there is little room to cut interest rates, and the government deficit and debt are high. Outside the United States, liabilities may also lurk under all the accumulated debt. Billionaire investor Stanley Druckenmiller warned that dollar-denominated borrowing by emerging markets, like Turkey, Argentina and others, meant they already are facing "a shrinkage of liquidity" as the US central bank raises interest rates. The trigger Federal Reserve rate hikes raise borrowing costs for companies and governments, particularly those with dollar-denominated debt, and those who need to refinance. "My assumption is one of these hikes -- I don't know which one -- is going to trigger this thing," Druckenmiller said, according to Business Insider. Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, said: "The Fed's tightening is already rattling emerging markets." He worries that markets have grown "too big to fail," bloated by money which poured in following the 2008 meltdown as central banks tried to stabilize the system. Central bank balance sheets went from $5 trillion to $17 trillion in the last decade, he wrote this month in The New York Times, swelling the value of global markets to $290 trillion, or a record 360 per cent of global Gross Domestic Product. Meanwhile, debt held by S&P 500 corporations has risen to 1.5 times earnings since 2010, near peaks that preceded past recessions. The typical privately-held corporation purchased by private equity investors in that time is leveraged to six times earnings, twice what a ratings agency would consider junk, according to Sharma. "When the American markets start feeling it, the results are likely be very different from 2008 -- corporate meltdowns rather than mortgage defaults, and bond and pension funds affected before big investment banks," he warned. Economist Joel Naroff told AFP the fading boost of December's tax cuts, combined with stagnant wage growth, could leave consumer spending "out of gas" in the next six to nine months. With the housing market already soft, a slowdown in the real economy could be the first shoe to drop, he added, with debt-fueled market bubbles being the second. "My view is that the next recession will be an average recession," Naroff said, but added, "The worst-case scenarios are not unreasonable to project."

Doomsayers begin to see cracks in healthy world economy

Australia&#39;s economy shrugged off a cyclone powered bad-weather hit to exports and home building in the first quarter of the year, posting just enough growth to claim nearly 26 years without recession - equalling the Netherlands&#39; 103-quarter record.

Data from the Australian Bureau of Statistics on Wednesday showed gross domestic product (GDP) grew at annual rate of 1.7 percent - the slowest since third-quarter of 2009 when it clocked 1.2 percent.

The local dollar gained a third of a U.S. cent after gross domestic product (GDP) matched expectations of a 0.3 percent rise in the first quarter, from the fourth when it ran at 1.1 percent.

Australia hasn&#39;t seen a recession since 1991 and its run of growth had been the envy of other rich nations although it is dropping off the pack now with both the Britain and the United States clocking 2 percent annual growth in the first quarter.

Output for the 12 months to March was A$1.72 trillion ($1.28 trillion) in current dollars, or about A$71,053 for each of Australia&#39;s 24 million people.

Growth took a knock from Cyclone Debbie, which hit northern parts of Queensland state late in March and caused widespread flooding in the coal-heavy region, disrupting rail haulage for several weeks. Negative net exports subtracted 0.7 percentage points from GDP.

The Reserve Bank of Australia (RBA) on Tuesday conceded economic activity slowed in the March quarter when it held interest rates at a record low 1.50 percent. However, it expressed confidence growth would pick up over the next couple of years to be above 3 percent.

So far, investors seem convinced the RBA is done with its five-year easing campaign. Futures prices imply a small chance of another rate cut by December.

There were doubts around domestic consumption though as households are being burdened by record-low wage growth and high levels of mortgage debt.

Household final consumption expenditure rose 0.5 percent driven by rises in rent, electricity and gas.

($1= 1.3330 Australian dollars)

Australia's economy posts enough GDP growth to claim nearly 26 years without recession - equalling the Netherlands' 103-quarter record.

Australia's economy shrugged off a cyclone powered bad-weather hit to exports and home building in the first quarter of the year, posting just enough growth to claim nearly 26 years without recession - equalling the Netherlands' 103-quarter record. Data from the Australian Bureau of Statistics on Wednesday showed gross domestic product (GDP) grew at annual rate of 1.7 percent - the slowest since third-quarter of 2009 when it clocked 1.2 percent. The local dollar gained a third of a U.S. cent after gross domestic product (GDP) matched expectations of a 0.3 percent rise in the first quarter, from the fourth when it ran at 1.1 percent. Australia hasn't seen a recession since 1991 and its run of growth had been the envy of other rich nations although it is dropping off the pack now with both the Britain and the United States clocking 2 percent annual growth in the first quarter. Output for the 12 months to March was A$1.72 trillion ($1.28 trillion) in current dollars, or about A$71,053 for each of Australia's 24 million people. Growth took a knock from Cyclone Debbie, which hit northern parts of Queensland state late in March and caused widespread flooding in the coal-heavy region, disrupting rail haulage for several weeks. Negative net exports subtracted 0.7 percentage points from GDP. The Reserve Bank of Australia (RBA) on Tuesday conceded economic activity slowed in the March quarter when it held interest rates at a record low 1.50 percent. However, it expressed confidence growth would pick up over the next couple of years to be above 3 percent. So far, investors seem convinced the RBA is done with its five-year easing campaign. Futures prices imply a small chance of another rate cut by December. There were doubts around domestic consumption though as households are being burdened by record-low wage growth and high levels of mortgage debt. Household final consumption expenditure rose 0.5 percent driven by rises in rent, electricity and gas. ($1= 1.3330 Australian dollars)

Australia's economy ties world record for longest expansion despite soft Q1

Pedro and Mohamed await every utility bill with much angst. To reduce the money they have to pay, they live in the dark, without heating, or shower just once a week -- victims like millions in Spain of energy poverty.

Welfare associations have for years warned against this situation, but the death earlier this month of 81-year-old Rosa in a fire caused by a candle she used for light has brought the issue firmly to the fore. Socialist lawmaker Pilar Lucio asked the ruling conservative government to immediately implement a &quot;winter truce&quot; on companies cutting power to those who cannot pay -- a measure with majority support in parliament and encouraged in a 2009 EU directive.

Last year, according to Spain&#39;s National Statistics Institute, 10.6 per cent of Spaniards were unable to properly heat their homes -- or more than four million people -- compared to just 5.9 per cent in 2008, when an economic crisis kicked off. At fault are the economic crisis and widespread loss of jobs it caused, as well as a 30- to 50-per cent rise in utility prices since 2006.

&nbsp;

&quot;Luxury&quot; items

Pedro Martinez, 48, has been in this situation for several years. Unemployed since 2013, when the furniture company he was working for closed, he survives on a pension of 426 euros ($450) a month, and what remains of the compensation he received for being fired.

Divorced, he lives with his 20-year-old son and 23-year-old mentally impaired daughter in a working-class district of Barcelona, without heating and using electric light only when absolutely necessary.

&quot;It&#39;s tough in winter. We just have an electric heater, which we rarely switch on for fear of the bill,&quot; he says. &quot;The cold chills you to the bone. We wear coats and at night we use all the blankets we have.&quot;

Tere Bermudez, spokeswoman for the Roman Catholic charity Caritas, says that &quot;for many families, water, light and gas are luxury items&quot;. She says that from 2007 to 2015, the organisation multiplied by 30 the number of utility bills it helped pay.

One of its beneficiaries is Mohamed Chairi, a 37-year-old Moroccan. Unemployed, his family lives off the monthly 250 euros from his wife&#39;s cleaning work as well as help from charities. &quot;We shower once a week, on Fridays, so that the kids are clean at the weekend,&quot; the father-of-three says.

In the corner of the living room of his small flat in Badalona near Barcelona, his youngest son plays with a broken electric radiator. Chairi has just received his electricity bill -- 24 euros for the month, a small sum for Spain but huge for him. &quot;The rent alone is 440 euros,&quot; he says. &quot;If I have to suffer from hunger or go without light or water, I don&#39;t care, but the kids...&quot;.

&nbsp;

Burning canvas shoes

According to the European Commission, Spain&#39;s gas and electricity prices were the third and fourth highest respectively in the European Union last year. &quot;We are above the European average (in terms of fuel poverty) despite having much better weather,&quot; says Jose Luis Lopez, spokesman for the Association of Environmental Science. There is no nationwide law on the issue, but several regions have implemented measures to try and address it.

In the northeastern region of Catalonia, for instance, a law stipulates that utility companies must notify social services before cutting electricity or gas, and if the family or person struggling to pay is classified as vulnerable, they are banned from doing so. But the law is not always respected, as was the case for Rosa, with utility firm Gas Natural acknowledging it had not contacted social services.

Lopez estimates that some 7,100 people die every year due to fuel poverty. Firefighters in Catalonia have also warned of the security risks involved.

&quot;We have come across people heating themselves with small fires made from newspapers or even canvas shoes,&quot; said union spokesman Antonio del Rio. Spain may be emerging from the crisis, but at least 600,000 households saw their electricity supply cut off last year, according to the Facua consumer association.

&quot;There&#39;s a lot of talk about recovery, but on the street you don&#39;t see it anywhere,&quot; said Pedro Martinez.

(AFP)

The economic crisis, widespread job loss and the soaring costs of energy have all conspired to put millions in Spain into energy poverty

Pedro and Mohamed await every utility bill with much angst. To reduce the money they have to pay, they live in the dark, without heating, or shower just once a week -- victims like millions in Spain of energy poverty. Welfare associations have for years warned against this situation, but the death earlier this month of 81-year-old Rosa in a fire caused by a candle she used for light has brought the issue firmly to the fore. Socialist lawmaker Pilar Lucio asked the ruling conservative government to immediately implement a "winter truce" on companies cutting power to those who cannot pay -- a measure with majority support in parliament and encouraged in a 2009 EU directive. Last year, according to Spain's National Statistics Institute, 10.6 per cent of Spaniards were unable to properly heat their homes -- or more than four million people -- compared to just 5.9 per cent in 2008, when an economic crisis kicked off. At fault are the economic crisis and widespread loss of jobs it caused, as well as a 30- to 50-per cent rise in utility prices since 2006. "Luxury" items Pedro Martinez, 48, has been in this situation for several years. Unemployed since 2013, when the furniture company he was working for closed, he survives on a pension of 426 euros ($450) a month, and what remains of the compensation he received for being fired. Divorced, he lives with his 20-year-old son and 23-year-old mentally impaired daughter in a working-class district of Barcelona, without heating and using electric light only when absolutely necessary. "It's tough in winter. We just have an electric heater, which we rarely switch on for fear of the bill," he says. "The cold chills you to the bone. We wear coats and at night we use all the blankets we have." Tere Bermudez, spokeswoman for the Roman Catholic charity Caritas, says that "for many families, water, light and gas are luxury items". She says that from 2007 to 2015, the organisation multiplied by 30 the number of utility bills it helped pay. One of its beneficiaries is Mohamed Chairi, a 37-year-old Moroccan. Unemployed, his family lives off the monthly 250 euros from his wife's cleaning work as well as help from charities. "We shower once a week, on Fridays, so that the kids are clean at the weekend," the father-of-three says. In the corner of the living room of his small flat in Badalona near Barcelona, his youngest son plays with a broken electric radiator. Chairi has just received his electricity bill -- 24 euros for the month, a small sum for Spain but huge for him. "The rent alone is 440 euros," he says. "If I have to suffer from hunger or go without light or water, I don't care, but the kids...". Burning canvas shoes According to the European Commission, Spain's gas and electricity prices were the third and fourth highest respectively in the European Union last year. "We are above the European average (in terms of fuel poverty) despite having much better weather," says Jose Luis Lopez, spokesman for the Association of Environmental Science. There is no nationwide law on the issue, but several regions have implemented measures to try and address it. In the northeastern region of Catalonia, for instance, a law stipulates that utility companies must notify social services before cutting electricity or gas, and if the family or person struggling to pay is classified as vulnerable, they are banned from doing so. But the law is not always respected, as was the case for Rosa, with utility firm Gas Natural acknowledging it had not contacted social services. Lopez estimates that some 7,100 people die every year due to fuel poverty. Firefighters in Catalonia have also warned of the security risks involved. "We have come across people heating themselves with small fires made from newspapers or even canvas shoes," said union spokesman Antonio del Rio. Spain may be emerging from the crisis, but at least 600,000 households saw their electricity supply cut off last year, according to the Facua consumer association. "There's a lot of talk about recovery, but on the street you don't see it anywhere," said Pedro Martinez. (AFP)

Light, water, heat a luxury in Spain

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