IMF predicts less severe recession. In its latest World Economic Outlook published on Tuesday, the International Monetary Fund (IMF) predicts global output will fall by 4.4 percent in 2020, better than the 5.2 percent slump forecast in the June update. The upgrade is supported by better-than-expected outcomes in the main economies in the second quarter despite the lockdowns to battle the coronavirus pandemic. However the outlook remains uncertain, especially for emerging markets, the Fund said. The global economy is forecast to return to growth of 5.2 percent in 2021, the IMF said. This rebound is slightly weaker than the June forecast, owing partly to the extreme difficulties for many emerging markets and a slowdown in the reopening of economies due to the continued spread of the coronavirus.
US consumer price growth matches estimates in September. US consumer prices increased for a fourth month in in a row in September, with the cost of cars and trucks rising by the most since 1969. The consumer price index (CPI) rose 0.2 percent last month after gaining 0.4 percent in August. The CPI advanced 0.6 percent in both June and July after falling in the prior three months as business closures to slow the spread of the coronavirus weighed on demand. However, inflation is slowing amid excess capacity in the economy as it gradually recovers from the coronavirus-induced recession. The report should allow the Federal Reserve to keep interest rates near zero for a while and continue with massive cash infusions as it tries to get the economy back on its feet.
German economic confidence at five-month low. Germany's economic sentiment deteriorated to a five-month low in October amid increasing uncertainty surrounding trade talks with the UK and the run-up to the presidential elections in the US, survey data from the ZEW - Leibniz Centre for European Economic Research showed on Tuesday. German economic sentiment fell to 56.1 in October from 77.4 in September, the survey showed. This was the lowest since last May. Meanwhile, the current conditions index rose to -59.5 from -66.2 in the previous month. Economists expected a reading of 60.0.
UK Unemployment Rises. The UK unemployment rate increased and redundancies reached their highest level since the global financial crisis in the three months to August even ahead of the scaling back of government's furlough scheme and the mounting fear of more restrictions. The International Labour Organisation (ILO) jobless rate rose by 0.4 percentage points from the prior quarter to 4.5 percent in the three months to August, the Office for National Statistics (ONS) reported on Tuesday. With the national furlough scheme closing at the end of this month and the new Covid-19 restrictions set to stall the economic recovery, a second bigger wave of unemployment is probably on its way, Paul Dales, an economist at Capital Economics, said.
China inflation eases further as farms recover from floods, swine fever. The rise in Chinese consumer prices slowed for a second month in a row in September, official data showed on Thursday, as pork supplies bounce back from the devastating African swine fever while farms recovered from flooding. The consumer price index (CPI), a key measure of retail inflation, rose by 1.7 percent last month from a year ago, compared with a 2.4 percent reading in August, according to the National Bureau of Statistics. The increase was less than expected. “Looking through the volatility in food prices, the broader disinflationary impact from the Covid-19 downturn continued to ease,” said Julian Evans-Pritchard, senior China economist of Capital Economics.