The reality of a global recession became further entrenched in November. Financial market volatility persisted and some of the world’s major economies reported successive quarters of negative growth. Consequently, the IMF revised its world growth estimates down. The US economy contracted in the September quarter with real gross domestic product (GDP) declining 0.1%. US housing construction activity continued to weaken. US consumers struggled with falling asset prices, tighter credit and rising unemployment, which continued to undermine spending. Business conditions, consumer confidence and manufacturing surveys also weakened. US inflationary pressures dissipated with the consumer price index (CPI) down 1% month-onmonth (mom) due to falling commodity prices and weak economic activity. Japan’s real GDP fell 0.1% quarter-on-quarter (qoq) in the third quarter with weak capital expenditure and declining net exports. Japan’s labour market continued to soften, while industrial production, household spending and manufacturing and business conditions weakened. The Bank of Japan responded with a surprise 0.2% interest rate cut. China’s economy also continued to moderate in November. Industrial production slowed sharply, reflecting weaker export demand. China’s CPI dropped to 4.0% year-on-year (yoy) in October, the lowest in 17 months. In response, policymakers lowered interest rates, reduced reserve requirement ratios and announced a fiscal stimulus package in order to boost confidence and investment spending. China’s consumer spending remained relatively robust with retail sales up 22% yoy in October. Europe also recorded its second consecutive quarter of activity contraction, which confirmed a recession in the region. Euro-zone real GDP fell 0.2% in the September quarter, following a 0.2% decline in the June quarter. Industrial production and various sentiment surveys indicated a dismal growth profile for both the industrial and consumer sectors in Europe. Conditions in the UK were equally bleak, with industrial production, house prices and transaction activity declining sharply. The resulting negative wealth effect continued to impact consumer spending, with UK retail sales down sharply. In response, the UK Government announced a £20 billion fiscal stimulus package to mitigate a deep recession. Both the Bank of England and the European Central Bank cut interest rates during the month.

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