The world this week
The Argentine government introduced emergency capital controls, restricting the amount of dollars that people and firms can buy. The measures are meant to stop money gushing out of the country amid a run on the peso, which has tumbled as investors fret that October’s presidential election will be won by a ticket that includes Cristina Fernández de Kirchner, a former president whose spendthrift policies ruined the economy.
India’s economy grew by 5% in the second quarter compared with the same three months last year, the country’s slowest growth rate in six years and well below market forecasts. Separate figures showed that domestic car sales slumped in August (by 49% for Tata Motors compared with August 2018) and that manufacturing activity was cooling rapidly. More government stimulus is now on the cards.
The Indian government also announced plans to streamline the country’s state-controlled banks, which hold lots of bad debt, cramping their ability to lend, and proposed that ten state banks be merged into four new ones. Markets gave the idea a cool reception.
Australia’s GDP grew by 1.4% in the second quarter, the slowest pace since the financial crisis. Exports are booming, but consumers in the Lucky Country are reining in their spending.
Turkey’s annual inflation rate fell to 15% in August, the lowest it has been for 15 months. Inflation soared to 25% at the end of last year amid a currency crisis. Today’s more stable lira and decreasing price pressures have boosted expectations that the central bank will again slash interest rates when it meets on September 12th, though probably by not as much as the 4.25-percentage-point cut to rates in July.
America and China agreed to resume high-level talks in early October to try to resolve their trade dispute. Negotiators last met in July and there is little hope that a breakthrough will come soon. There was evidence this week that the dispute is having an effect on manufacturing. Factory output in America surprisingly contracted in August for the first time in three years. In Britain manufacturing activity fell to a seven-year low. And in Germany a purchasing-managers’ index suggested that manufacturing had shrunk for an eighth consecutive month. Figures in China showed manufacturing contracting for the fourth month in a row.