The latest spate of economic data for the global economy has been worrying. Not only are the developed countries struggling to make any meaningful recovery but there has been economic slowdown in the emerging countries such as India and China as well.
Governments across the developed world have been injecting liquidity into the system through various ways in an attempt to kick start growth. But this has hardly helped. The fundamentals have continued to remain weak. For instance, in the US, the recent manufacturing and unemployment data have been quite disappointing. On the other hand, most of the countries continue to feel the burden of rising debt. This was evident when at the beginning of 2013, one more country, Cyprus faced a crisis and had to be bailed out. Even Japan is facing the heat and the government has only responded by embarking on a huge monetary experiment.
Emerging markets have not been spared either. Because both India and China had grown so splendidly before the crisis, it was expected that they would help in rebalancing global growth. But the past few years have seen both these countries slow down too although the growth in GDP has been higher than that of their developed peers.
China's manufacturing data has been disappointing signifying weakening of manufacturing activity. The current reported GDP data of the country was in single digit. Continuous slowdown in China will be a matter of concern. This is because China is not only among the world's largest exporters but also a significant importer, with partners like the US and the UK on the other side of the trade. With major global economies facing challenges, if China too faces a hard landing, the shocks will be felt across the world. Even the Indian economy is facing tough times on account of high consumer inflation and bloated deficits. The manufacturing sector in the country has also been weak.
What is alarming is that the slowdown has spread across regions and is no longer limited to only the developed world. All of this highlights that overall growth for the global economy in the near term seems tepid at best.