Hellenic Shipping News has given following update
The euro zone crisis contagion has already started to impact the slowdown of Asian and US economies, with manufacturing activity slipping to record lows and fiscal monetary policy being adjusted to stimulate economic growth. Central banks in Europe and Asia attempted to stimulate the sluggish global economy at the end of the week by loosening monetary policy and cutting interest rates. China’s unexpected move to cut rates for the second time in less than a month reveals how worried Beijing is about the declining domestic growth, below 8% for this year, showing that the economic slowdown extends beyond the euro are.
The People's Bank of China cut its one year lending rate by 0.31% points to 6%, while the European Central Bank, as expected, cut its main interest rate by a quarter points to 0.75%, the lowest on record and the Bank of England restarted money printing and injected an extra £50bn into the UK economy, increasing the total to GBP 375 billion.
A factory slump in Asia's two biggest exporters, China and Japan, deepened in June, as export orders fell to a seven month low, highlighting increased worries that the health of the global economy is deteriorating. China's manufacturing activity fell to a seven month low in June 2012, despite government efforts to arrest a slowdown in the world's second largest economy.
The China Federation of Logistics and Purchasing said in a statement that the official purchasing managers' index slipped to 50.2 in June 2012 from 50.4 in May 2012. June's figure marks the lowest level since November 2011, when PMI hit 49. A PMI value above 50 indicates expansion, while a reading below 50 means contraction.
According to EU statistics from Eurostat, in the meantime, unemployment in the euro zone hit a fresh record high of 11.1% in May 2012, form 11% the previous month, while manufacturing Purchasing Managers' Index has been stuck at 45.1 in June 2012, indicating contraction. May's unemployment rate is the highest since euro was launched in 1999 and adds further urgency to the euro zone countries' plan to create economic growth and cut excessive government debt.
Unemployment rate in the euro zone is higher than the rate of 8.2% in United States and 4.4% in Japan and it is expected to rise further in the coming months as eurozone’s economy slides to a further recession.
In US, manufacturing activity also contracted for the first time in three years reassuring that the global economy is already suffering seriously from the euro zone debt crisis and China’s economic slowdown. In a shock to economists, who were expecting manufacturing growth to slow moderately, the Institute for Supply Management's survey on the US industrial sector reported a large decline in activity from 53.5 in May 2012 to 49.7 in June 2012, its lowest level since the recession ended in mid 2009. The weak ISM data emerges from China’s slow pace of industrial expansion, while euro zone manufacturing activity remains at its weakest level in three year.
Source - Hellenic Shipping News
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