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The Global Economy Is Slowing Down. But Is It Recession – Or Protectionism?

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For one Chinese company that depends on global trade, fears over the worldwide economy have come to pass already. “The global economy is pretty bleak at the moment,” says Luo Dong, the owner of Doyoung, a Beijing-based exporter of frozen seafood and fruit. “This is having a big effect on us. Our clients’ sales are a lot slower than they used to be, and as purchasing power overseas drops, our exports are taking a hit.”

Luo’s observations were echoed on a wider stage last week, when the Paris-based Organisation for Economic Co-operation and Development voiced the fear gripping many economists: that the drop-off in trade, driven by China, may be a harbinger of something more worrying – a global recession.

Days later, Rolls-Royce became the latest British exporter to face what it called “headwinds” from China, joining a slew of others, from carmaker Jaguar Land Rover to luxury brand Burberry. Meanwhile, commodities including platinum and crude oil resumed their decline in value as investors continued to fret about sliding demand for the raw materials of global commerce. Beijing has cut interest rates six times in less than a year and let the yuan slide against the dollar, underlining the sense of alarm about slowing growth.

Official figures show GDP expanding at around 6.9% in the world’s second-largest economy, conveniently in line with the government’s official target of “around 7%”; but outside analysts believe it may be much weaker. “We find these numbers pretty implausible,” says Andrew Brigden of City consultancy Fathom. “China is slowing a lot more markedly than the official figures show.” Fathom’s calculations, based on alternative indicators such as electricity use, suggest GDP growth of 3% or even less.

However, inside China it feels as though sluggish demand from the eurozone, rather than a homegrown problem, is to blame for the deterioration in the economic weather.

The export recovery dead in the water? I wonder what plan B is for George as another global recession appears on the horizon just as the Fed is going to "normalise" interest rates.

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and as purchasing power overseas drops, our exports are taking a hit.”

As mentiioned on the other thread, many currencies around the world are in the process of collapsing and sales to those countries will go the same way. This will have a big effect on China.

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Monday markets will be interesting indeed. we should be hitting fresh within lows in the next 3 weeks. should hopefully accelerate down from there onwards. not sure if gold cash or bonds will benefit the most though.

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