Fears are growing over the state of the global economy after China recorded a shock plunge in exports, while European factory output slumped by the biggest margin in almost three years.
In a sign of the world economy reaching a tipping point, official figures showed that Chinese exports dropped by 4.4% in December, in the largest fall since 2016, on the back of faltering demand in most of its key markets. Imports also slipped by 7.6% to reflect waning demand at home.
The unexpected downturn for the biggest global exporter of manufactured products came as eurozone industrial output also tumbled in November, with the largest drop in factory activity since February 2016.
The EU statistics office, Eurostat, estimated industrial production slipped by 1.7% in November compared with the previous month and by 3.3% on the year, reflecting the struggles facing several European economies in recent months.
Financial markets around the world sold off sharply on Monday, with the FTSE 100 shedding about 70 points and losses on bourses across Europe. Wall Street futures – financial contracts betting on future share prices – also indicated losses in New York.
Fears have been mounting over the health of the world economy for several months as the US-China trade dispute serves as a handbrake on global trade. Although there are early signs of a breakthrough between Washington and Beijing, global economic growth has already taken a knock.
The Organisation for Economic Cooperation and Development warned that most of the world’s biggest economies are showing signs of easing growth momentum, with the biggest declines coming in France and Britain.
The OECD said its composite leading indicators, gauges of economic activity that are designed to anticipate turning points relative to past performance for between six to nine months ahead, also showed easing growth momentum in the US, Germany, Canada, Italy and the euro area as a whole.
Despite the disappointing economic data from China, the OECD said that its industrial sector was still showing signs of “stable growth momentum”.
Although factory output declined in December, total Chinese trade last year increased by 12.6% compared with 2017 to stand at $4.6tn (£3.6tn). Exports rose by 9.9%, while imports increased by 15.8%.
China also increased its trade surplus with the US – a key bone of contention for Donald Trump in the trade war – by 17% to $323.3bn, the highest since 2006.