The world economy forced to drag its feet because of global manufacturing

Dec 02 2019 / By Shreyas Tanna

America's manufacturing sector clobbered with the consequences of the trade war between the US and China in 2019. Conditions weren't much different worldwide. The sector has been added to the plight of weak car sales across the board.

With just one month left in the year, Fitch reports worldwide car sales are on the path of a 3.1 million drop, around 4 percent per year. That would be the biggest decline since the financial crisis struck in 2008 and revenues have declined in the second year in a row. In 2019 Fitch anticipates sales of 77.5 million vehicles worldwide.

The main driver behind the drop is declining Chinese demand, which is the largest car market in the world and where sales have dropped by 11% this year. Beijing lowered the electric vehicle subsidy earlier this year, resulting in a decrease in sales.

However, decreasing vehicle sales did not end at the borders of China. Indeed, Germany is on the edge of recession already. Audi reported on Tuesday that Germany is cutting 7,500 jobs. For the global production recovery, this does not bode well.

However, at the end of the tunnel, there is some light. The world production index decreased less than in October previous months, although its sixth month of decrease was reported consecutively.

All returns to normal. The United States-China trade war was the biggest issue of the year. International stock markets have been washed and filled to the headlines of trade, while the business community has held down investments to wait for deals to be completed.

Global manufacturing may recover by 2020, but it also depends on whether a deal is concluded.

The recovery is a concern of at least international central banks. Big central banks, including Federal Reserve, cut interest rates, which has traditionally led to the world economy, contributing to favorable financial conditions.

In October, Beijing and Washington agreed on a preliminary agreement not yet signed. Investors start to ask if this' phase 1' agreement will ever be a full-blown trade agreement.

The next round of tariffs will be aimed at consumer goods on 15 December. The USA postponed levies so that we won't dismiss Christmas shoppers.