EU Finally Enters Technical Recession 🚨

Only a few hours left until market close which means the chances of you ending up like this guy are a little less. 👇🏼

@forex.funny

forex Will be the end of us😤 #forexjokes no 5

But they’re not zero. Be careful out there. 😤

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Trade Of The Day 📈

EU Recession: It's Official 🚨

The EU has officially fallen into a mild recession. 📉

After a prediction that the GDP would at least stay the same this quarter, the 0.1% decrease pushed the Euro Zone over the edge.

What declined?

• Household spending 🏠

• Government spending 💰

• Exports 👉🏼

• Imports 👈🏼

• Labour productivity 👷🏽‍♀️

• Shall I go on?

So what's a recession anyway?

Although the word sounds scary, it really just means a period of economic decline where GDP fell at least two quarters in a row.

During this quarter, households in the EU finally succumbed to the pressure of high gas and food prices and pulled the GDP down.

This followed a 1.0% drop last quarter. Therefore, recession begins. 🏁

What happens now?

Well, inflation has fallen in the Euro area but the interest rate hikes are not over. Prices are still too high. 🏷

Although some recessions only last a few months, experts predict that the sluggish EU economy won't be looking up anytime soon.

China On Thin Ice ⛸

If you were worried about deflation in China, this isn't going to make you feel any better. 😬

The CPI only increased by a mere 0.2% last month compared to May last year. This was lower than expected and much lower than China had hoped for.

Where is this decline coming from?

• Covid-19 had a massive impact on the amount of labour workers still available to work in manufacturing. 😷

• Demand has weakened for Chinese goods from other countries because globally high interest rates are causing consumers to spend less. 🛍

• Policymakers aren’t stepping up to the plate.🙈

What’s contributing to the slight increase? 👆🏼

Food prices in China rose by 1% compared to May 2022. This is just a small consolation though.

The producer price index (PPI) was a little more concerning.

Woah, woah, woah. What is THAT?

PPI is the price that the manufacturer will charge a business to purchase the goods. Businesses buy from the producer at a wholesale price, and then sell at retail price to make a profit. 💰

For example, if a store sells shoes:

The store buys the shoes from a manufacturer at wholesale for $20 a pair and sells them to the consumer for $40.

PPI = $20 👠

CPI = $40 🛍

In May, PPI fell 4.6% compared to last year.

This does not bode well for businesses that depend on selling goods at wholesale, as they will be making less money than before. In this case, the manufacturer.

With China’s economy facing a major slowdown and demand continuing to weaken, policymakers in Beijing are under some pressure.

They need to take some action. 👊🏼

Big decisions will hopefully be made in July when the policy making committee, headed by President Xi Jinping, looks at second quarter GDP data.

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