Weak economic readings from China, Japan and Britain and a grim corporate outlook worldwide reinforced fears on Tuesday of a prolonged recession, prompting investors to look to a world leaders’ summit for solutions. Chinese import growth slowed in October and inflation fell to a 17-month low as domestic demand cooled, making it likely Beijing will cut interest rates soon to back up the government’s new economic stimulus plan. “The increasing risk of deflation will make the central bank more aggressive in loosening monetary policy,” said Hu Yuexiao, an analyst with Shanghai Securities.
In Japan, exports fell nearly 10% in the first 20 days of October, corporate bankruptcies jumped 13.4% year-on-year and sentiment in its service sector hit an all-time low, all signs the world’s second biggest economy was teetering on the brink of recession. German analyst and investor sentiment about the outlook for Europe’s largest economy improved but the ZEW survey, which measures the ratio of optimists to pessimists, still read -53.5, reflecting a large preponderance of the latter.
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