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International Economic Week In Review For 3/2-3/6

Hale Stewart profile picture
Hale Stewart


  • The OECD has lowered its global growth forecast.
  • Manufacturing data is still weak.
  • International markets are still in corrections.

Investment thesis: the major international markets are still correction. While some may be forming bottoms, it's still way too early to think about taking a position in any region.

On Monday, the OECD lowered its global growth estimatedue to the coronavirus (emphasis added):

On the assumption that the epidemic peaks in China in the first quarter of 2020 and outbreaks in other countries prove mild and contained, global growth could be lowered by around ½ percentage point this year relative to that expected in the November 2019 Economic Outlook.

A longer lasting and more intensive coronavirus outbreak, spreading widely throughout the Asia-Pacific region, Europe and North America, would weaken prospects considerably. In this event, global growth could drop to 1½ per cent in 2020, half the rate projected prior to the virus outbreak.

Here's a graphic of the OECD's projections:Obviously, these are estimates. But the point is taken: growth will take a hit.

The latest manufacturing PMIs from Markit are mixed.

  • China's PMI dropped from 51.1-40. However, don't be surprised to see that number boomerang over the coming months as China restarts its economy.
  • Japan's PMI dropped from 48.8-47.8. New orders, production, and employment all decreased.
  • Taiwan's PMI dropped from 51.8-49.9, entering contraction territory. New orders, production, and employment all declined.
  • Indonesia's PMI rose to 51.9, but only due to the strength of domestic orders. Export orders declined.
  • South Korea's PMI fell from 49.8-48.7, with production and export orders declining.
  • The EU's manufacturing sector is still contracting; it rose from 47.9 to 49.2 but is still below 50.
  • The UK continues to get a post-Johnson victory boost; its PMI is 51.7 thanks to a rise in domestic orders.

Most of this data is pre-coronavirus.

The service data was mixed.

  • China's service PMI dropped from 51.8-26.2, with new orders, production, and employment

This article was written by

Hale Stewart profile picture
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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