China's economy was expected to generate a third of global economic growth this year, but the country's precipitous downturn in recent months is causing concern throughout the world.

Policymakers are bracing their economies for a hit as China's imports of everything, from building supplies to electronics, fall. According to Caterpillar Inc., Chinese demand for construction machinery is worse than previously assumed.

A recent Bloomberg report highlighted&nbsp;that global investors have already removed more than $10 billion from China's stock markets, with blue chips accounting for the majority of the selling. Goldman Sachs Group Inc. and Morgan Stanley have reduced their targets for Chinese stocks, with the former also warning of regional spillover concerns.

Asian economies, along with African countries, have suffered the most damage to their commerce thus far. In July, Japan recorded its first dip in exports in more than two years as China reduced imports of vehicles and electronics. South Korean and Thai central bankers downgraded their growth projections last week, citing China's slow recovery.

China's downturn: global market impact

However, it is&nbsp;not all bleak, as China’s downturn will lower global energy costs, and the country's deflation will imply that the prices of commodities sent throughout the world are reducing. This is good news for nations like the United States and the United Kingdom, which are currently dealing with high inflation.

Some rising nations, such as India, perceive openings and hope to attract foreign investment that may be leaving China's borders.

However, as the world's second-largest economy, a prolonged downturn in China will&nbsp;affect the rest of the world rather than benefit it. According to International Monetary Fund research, every percentage point increase in China's growth rate boosts global expansion by around 0.3 percentage points.

China's deflation "isn't such a bad thing" for the global economy. "However, if the rest of the world, including the United States and Europe, goes into recession and China remains weak, that will be a problem—not just for China but for the entire global economy,"&nbsp;Peter Berezin, chief global strategist at BCA Research Inc., said in an interview on Bloomberg TV.

Decline in trade activity

Many nations, particularly those in Asia, consider China to be their most important export market for everything from electronic components and food to metals and energy.

The value of Chinese imports has declined for nine of the last ten months as demand falls from epidemic highs. Shipments from Africa, Asia, and North America were all worth less in July than a year earlier.

Africa and Asia have been impacted the worst, with imports falling by more than 14 per cent&nbsp;in the first seven months of this year. Part of this is due to a reduction in demand for electronics parts from South Korea and Taiwan, while declining commodity prices, such as those for fossil fuels, are also having an impact on the value of items exported to China.

At present, the real volume of goods shipped to China, such as iron ore, has remained stable. However, if the slowdown persists, supplies might be disrupted, affecting miners in Australia, South America, and other parts of the world.

Impact of currency fluctuation

China's economic difficulties have driven the yuan down more than 5 percent versus the dollar this year, with the yuan on the verge of breaking through the 7.3 barrier this month. The central bank has stepped up its defense of the yuan through a variety of means, including daily currency fixes.

According to Bloomberg statistics, the offshore yuan's devaluation is having a stronger influence on its counterparts in Asia, Latin America, and the Central and Eastern Europe bloc, with the Chinese currency's correlation to certain others growing.

China's interest rate reduction this year has made its bonds less appealing to international investors, who have decreased their exposure to the market and are seeking alternatives elsewhere in the region.

(Inputs from Bloomberg)

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China's economy was expected to generate a third of global economic growth this year, but the country's precipitous downturn in recent months is causing concern throughout the world.

China's economy was expected to generate a third of global economic growth this year, but the country's precipitous downturn in recent months is causing concern throughout the world. Policymakers are bracing their economies for a hit as China's imports of everything, from building supplies to electronics, fall. According to Caterpillar Inc., Chinese demand for construction machinery is worse than previously assumed. A recent Bloomberg report highlighted that global investors have already removed more than $10 billion from China's stock markets, with blue chips accounting for the majority of the selling. Goldman Sachs Group Inc. and Morgan Stanley have reduced their targets for Chinese stocks, with the former also warning of regional spillover concerns. Asian economies, along with African countries, have suffered the most damage to their commerce thus far. In July, Japan recorded its first dip in exports in more than two years as China reduced imports of vehicles and electronics. South Korean and Thai central bankers downgraded their growth projections last week, citing China's slow recovery. China's downturn: global market impact However, it is not all bleak, as China’s downturn will lower global energy costs, and the country's deflation will imply that the prices of commodities sent throughout the world are reducing. This is good news for nations like the United States and the United Kingdom, which are currently dealing with high inflation. Some rising nations, such as India, perceive openings and hope to attract foreign investment that may be leaving China's borders. However, as the world's second-largest economy, a prolonged downturn in China will affect the rest of the world rather than benefit it. According to International Monetary Fund research, every percentage point increase in China's growth rate boosts global expansion by around 0.3 percentage points. China's deflation "isn't such a bad thing" for the global economy. "However, if the rest of the world, including the United States and Europe, goes into recession and China remains weak, that will be a problem—not just for China but for the entire global economy," Peter Berezin, chief global strategist at BCA Research Inc., said in an interview on Bloomberg TV. Decline in trade activity Many nations, particularly those in Asia, consider China to be their most important export market for everything from electronic components and food to metals and energy. The value of Chinese imports has declined for nine of the last ten months as demand falls from epidemic highs. Shipments from Africa, Asia, and North America were all worth less in July than a year earlier. Africa and Asia have been impacted the worst, with imports falling by more than 14 per cent in the first seven months of this year. Part of this is due to a reduction in demand for electronics parts from South Korea and Taiwan, while declining commodity prices, such as those for fossil fuels, are also having an impact on the value of items exported to China. At present, the real volume of goods shipped to China, such as iron ore, has remained stable. However, if the slowdown persists, supplies might be disrupted, affecting miners in Australia, South America, and other parts of the world. Impact of currency fluctuation China's economic difficulties have driven the yuan down more than 5 percent versus the dollar this year, with the yuan on the verge of breaking through the 7.3 barrier this month. The central bank has stepped up its defense of the yuan through a variety of means, including daily currency fixes. According to Bloomberg statistics, the offshore yuan's devaluation is having a stronger influence on its counterparts in Asia, Latin America, and the Central and Eastern Europe bloc, with the Chinese currency's correlation to certain others growing. China's interest rate reduction this year has made its bonds less appealing to international investors, who have decreased their exposure to the market and are seeking alternatives elsewhere in the region. (Inputs from Bloomberg) WATCH WION LIVE HERE

Worries mount globally as China's economy slumps

Samsung&nbsp;Electronics Co Ltd's third-quarter profit could tumble 25 per cent, the first year-on-year decline in nearly three years, as an economic downturn saps demand for electronic devices and&nbsp;chips that power them.

Globally, inflation is on the rise, central banks are aggressively hiking interest rates, fears of recession are growing and uncertainty about the fallout from Russia's invasion of Ukraine is ever-present. As a result, businesses and consumers alike have reined in spending.

Operating profit for&nbsp;Samsung, the world's biggest memory chip and smartphone maker, likely fell to 11.8 trillion won ($8.3 billion) in the July-September quarter, according to a Refinitiv SmartEstimate from 22 analysts.

"Being the world's top memory chip maker, top in TV and mobile OLED displays, and top in smartphone shipments,&nbsp;Samsung&nbsp;is highly sensitive to the economy, with profits easily linked to demand," said Greg Roh, head of research at Hyundai Motor Securities.

Also read |&nbsp;Review: Samsung Galaxy Z Flip 4 | Tech It Out

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It would be the first profit decline since the first quarter of 2020, early on in the pandemic, and the lowest level of quarterly profit since the first quarter of 2021. Until this latest quarter, robust demand for devices as people were forced to stay at home has driven large profit gains for the South Korean tech giant.

Operating profit for&nbsp;Samsung's chip business likely fell by nearly a third to 6.8 trillion won, an average of seven estimates showed.

Prices of some DRAM memory chips, widely used in smartphones and PCs, tumbled 14 per cent&nbsp;in the quarter while prices for NAND flash chips, used in data storage, fell 8 per cent, according to TrendForce data.

Shares in&nbsp;Samsung, which will announce preliminary results at about 8.40 local time on Friday (2340 GMT on Thursday), have fallen about 30 per cent&nbsp;this year. That compares with a 37 per cent&nbsp;slump for the Philadelphia Semiconductor index.

Samsung's mobile business is also expected to see profits tumble with forecasts calling for a 17 per cent&nbsp;fall to 2.8 trillion won, although the launch of the company's pricy new foldable phones during the quarter raised the average selling price.

Kim Yang-jae, an analyst at Daol Investment &amp; Securities, estimates that&nbsp;Samsung's smartphone shipments dropped 11 per cent in the quarter from the same period a year earlier to about 62.6 million smartphones after distribution channels cut orders.

Memory chip rival Micron Technology last week significantly cut its investments for the next year and warned of tougher times ahead.

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Samsung Electronics Co Ltd's third-quarter profit could tumble 25 per cent, the first year-on-year decline in nearly three years, as an economic downturn saps demand for electronic devices and chips that power them.

Samsung Electronics Co Ltd's third-quarter profit could tumble 25 per cent, the first year-on-year decline in nearly three years, as an economic downturn saps demand for electronic devices and chips that power them. Globally, inflation is on the rise, central banks are aggressively hiking interest rates, fears of recession are growing and uncertainty about the fallout from Russia's invasion of Ukraine is ever-present. As a result, businesses and consumers alike have reined in spending. Operating profit for Samsung, the world's biggest memory chip and smartphone maker, likely fell to 11.8 trillion won ($8.3 billion) in the July-September quarter, according to a Refinitiv SmartEstimate from 22 analysts. "Being the world's top memory chip maker, top in TV and mobile OLED displays, and top in smartphone shipments, Samsung is highly sensitive to the economy, with profits easily linked to demand," said Greg Roh, head of research at Hyundai Motor Securities. Also read | Review: Samsung Galaxy Z Flip 4 | Tech It Out It would be the first profit decline since the first quarter of 2020, early on in the pandemic, and the lowest level of quarterly profit since the first quarter of 2021. Until this latest quarter, robust demand for devices as people were forced to stay at home has driven large profit gains for the South Korean tech giant. Operating profit for Samsung's chip business likely fell by nearly a third to 6.8 trillion won, an average of seven estimates showed. Prices of some DRAM memory chips, widely used in smartphones and PCs, tumbled 14 per cent in the quarter while prices for NAND flash chips, used in data storage, fell 8 per cent, according to TrendForce data. Shares in Samsung, which will announce preliminary results at about 8.40 local time on Friday (2340 GMT on Thursday), have fallen about 30 per cent this year. That compares with a 37 per cent slump for the Philadelphia Semiconductor index. Samsung's mobile business is also expected to see profits tumble with forecasts calling for a 17 per cent fall to 2.8 trillion won, although the launch of the company's pricy new foldable phones during the quarter raised the average selling price. Kim Yang-jae, an analyst at Daol Investment & Securities, estimates that Samsung's smartphone shipments dropped 11 per cent in the quarter from the same period a year earlier to about 62.6 million smartphones after distribution channels cut orders. Memory chip rival Micron Technology last week significantly cut its investments for the next year and warned of tougher times ahead. WATCH WION LIVE HERE

Samsung quarterly profit set to slump 25%, first decline in nearly three years

The latest indication that Europe's largest economy is teetering on the verge of recession is the drop in German business confidence to its lowest level in more than two years. According to the carefully studied business confidence index from the Ifo Institute, businesses in Germany have grown more pessimistic about both their current situation and the prospects for the next six months. This month, the index dropped to 88.6, from 92.2 in June, which was the lowest reading since June 2020.

Germany has been severely impacted by rising prices and the Russian gas issue, which poses a wintertime production freeze danger to some of the nation's industrial powerhouses.Due to Germany's reliance on Russian gas, concerns have been raised over whether or not Germans will be able to afford to heat their houses this winter.

The government has declared that in addition to taking steps to enhance gas conservation, it will also need more gas storage. Additionally, it declared that it would support Uniper, an energy supplier, raising the possibility of price increases.

According to experts surveyed by Reuters, German growth of only 0.1% is predicted to be shown in the second quarter's gross domestic product numbers. After contracting by 0.3% in the last three months of 2021, the GDP expanded by 0.2% in the first quarter of 2022.

The Ifo figures were worse than anticipated by Reuters' survey of experts, who predicted an average decline in the index of 90.5 points. According to Clemens Fuest, head of Ifo, "higher energy prices and the danger of a gas shortage are weighing on the economy," and the largest economy in the eurozone was "on the edge" of a recession, which is characterised by two consecutive quarters of negative growth.

(With inputs from agencies) 
&nbsp;

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The latest indication that Europe's largest economy is teetering on the verge of recession is the drop in German business confidence to its lowest level in more than two years.

The latest indication that Europe's largest economy is teetering on the verge of recession is the drop in German business confidence to its lowest level in more than two years. According to the carefully studied business confidence index from the Ifo Institute, businesses in Germany have grown more pessimistic about both their current situation and the prospects for the next six months. This month, the index dropped to 88.6, from 92.2 in June, which was the lowest reading since June 2020. Germany has been severely impacted by rising prices and the Russian gas issue, which poses a wintertime production freeze danger to some of the nation's industrial powerhouses.Due to Germany's reliance on Russian gas, concerns have been raised over whether or not Germans will be able to afford to heat their houses this winter. The government has declared that in addition to taking steps to enhance gas conservation, it will also need more gas storage. Additionally, it declared that it would support Uniper, an energy supplier, raising the possibility of price increases. According to experts surveyed by Reuters, German growth of only 0.1% is predicted to be shown in the second quarter's gross domestic product numbers. After contracting by 0.3% in the last three months of 2021, the GDP expanded by 0.2% in the first quarter of 2022. The Ifo figures were worse than anticipated by Reuters' survey of experts, who predicted an average decline in the index of 90.5 points. According to Clemens Fuest, head of Ifo, "higher energy prices and the danger of a gas shortage are weighing on the economy," and the largest economy in the eurozone was "on the edge" of a recession, which is characterised by two consecutive quarters of negative growth. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Recession in Germany? Business confidence slumps to two-year low

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