Friday, October 19, 2012

Central Banks See Slowing International Environment

From South Korea:

Based on currently available information, the Committee considers the economic recovery in the US to have continued, albeit at a moderate pace, but the sluggishness of economic activities in the euro area to have deepened. Growth has continued to slow in emerging market countries as well, due mostly to the impact of the economic slumps in advanced countries. The Committee expects the pace of global economic recovery to be very modest going forward and judges the downside risks to growth to be large, owing chiefly to the spillover of the euro area fiscal crisis to the real economy and to the possibility of the so-called fiscal cliff materializing in the US.

Bank of England:

Output growth had remained soft across many advanced and emerging economies, and world trade had grown only slowly in recent quarters. The JPMorgan global composite Purchasing Managers’ Index (PMI) for September had suggested that growth in output and new orders had risen on the month, but those indices also continued to point to below-average growth rates.


Members noted that the gradual slowing of Chinese economic growth had been accompanied by declining exports to Europe for some time and, more recently, falls in exports to the United States and Japan. The slowing of growth in China had resulted in weaker demand for steel, which was evident in the falls in steel and iron ore prices in August and had resulted in lower steel production. The Chinese authorities had announced a number of infrastructure projects, although the additional stimulus that this imparted was likely to be modest in the near term. The housing market appeared to have turned but, with prices picking up in recent months, controls on the property market that sought to improve affordability were likely to remain in place, at least in the near term.

The slowing of growth in Japan and other parts of east Asia in recent months partly reflected softer global demand, which had weighed on exports and industrial production, particularly for electronic products. Consumer confidence remained subdued across the region. Despite the slowing in economic activity, there had been little recent further monetary easing in the region, apart from Japan.

Indicators over the past month suggested that the US economy continued to expand at a modest pace. Members noted that while there had been a few positive developments, growth in important parts of the economy remained restrained. The housing market was improving gradually, with both turnover and prices picking up in recent months. In contrast, labour market conditions remained subdued, with employment growth noticeably slower than earlier in the year. The Federal Reserve referred to this weakness when it announced additional monetary stimulus measures in September.

Economic activity in both the euro area and the United Kingdom was continuing to contract amid weak domestic demand, with investment remaining subdued. Members observed that growth had slowed even in the better-performing economies. Although some further progress had been made in resolving the banking and fiscal problems in Europe, these problems were likely to present large downside risks to the world economy for some time.