Tuesday, Jul 16, 2019

Recession in Italy fuels global slowdown fears

Recession in Italy fuels global slowdown fears
01 Feb
2019

A recession in Italy and weak growth across Europe could force the European Central Bank to rule out interest rate hikes this year.

Italy slipped into recession in the fourth quarter of 2018, according to data published Thursday. The countries using the euro currency collectively generated annual growth of just 1.2% during the final three months of the year, down from 1.6% in the previous quarter.
Andrew Kenningham, chief Europe economist at Capital Economics, said the data "confirms that the region has lost a lot of momentum."
"We expect the ECB to reduce its GDP growth forecasts ... and to make clear that it does not expect to raise rates until next year at the earliest," he added. The ECB next meets to set policy in March.
There is growing evidence of a global economic slowdown caused by the trade war between the United States and China and uncertainty over Brexit.
On Wednesday, the US Federal Reserve signaled that it will throttle back its plans to raise interest rates this year amid rising economic uncertainty.
Chairman Jerome Powell told reporters that the central bank "can best support the economy by being patient and evaluating the outlook before making any future adjustment to policy."

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