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 China has become the focal point for economists as they fear a hard
landing there could send countries that have only just escaped from
the doldrums reeling back into recession.
Beijing will publish September trade data on Tuesday and inflation
on Wednesday and any significant deviation from expectations could
set the tone for the week.
The deluge of data from China in coming weeks is likely to point to
further weakness, reinforcing expectations Beijing will roll out
more stimulus measures to ward off a sharper slowdown.
"After the past few turbulent weeks and continued concerns with
regard to the world's second largest economy, the data will also
attract great attention in view of GDP figures due out on October
19," said economists at DZ Bank.
In the euro zone, final inflation numbers for some member countries
will be published during the week with the bloc's reading on Friday
expected to confirm prices fell 0.1 percent annually last month.
Since March the European Central Bank has been pumping 60 billion
euros a month into the economy as part of its battle to drive up
inflationary pressures but the program has so far failed to spark
price rises.
Expectations are that it will eventually have to be extended beyond
its planned completion date.
"We think additional ECB easing is in the pipeline," said Martina
von Terzi at UniCredit.
"New stimulus is likely to reflect the ECB's heightened risk
aversion, increasing awareness by the Governing Council that the
bank's inflation projections are too optimistic, and the need to
counter upward pressure on the euro."
But with the ECB's next rate meeting fast approaching, most bets
have already been made and the hawks seem to be winning, so there
may not be any extension or expansion of quantitative easing for
now.
Next week some of the ECB's biggest guns are speaking so if their
thinking is shifting, it will be the time to send fresh signals
before the Oct. 22 gathering of rate setters in Malta.
In contrast, other major central banks long ago set the printing
presses running to flood their economies with newly created money,
spending around $7 trillion to defend themselves during the global
financial crisis.
Indeed, markets are now focusing on when the U.S. Federal Reserve
pulls the trigger and tightens policy for the first time in nearly a
decade after it took a pass last month.
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The minutes of that meeting showed the Fed thought the economy was
close to warranting a rate hike, but policymakers wanted firmer
evidence the global economic slowdown was not knocking America off
course.
Subsequent economic data has shown a sharp slowdown in hiring by
U.S. employers.
Retail sales numbers on Wednesday ahead of industrial production and
Michigan consumer sentiment on Friday will indicate if there is
still a chance of a rise this year.
Inflation data is due on Thursday and four voting members of the
Federal Open Market Committee also speak next week.
The International Monetary Fund has urged the Fed and Japanese and
European central banks to wait for more signs of recovery before
tightening. IMF Chief Christine Lagarde on Thursday repeated her
plea to Fed Chair Janet Yellen to stay her hand.
The Bank of England left borrowing costs at a record low 0.5 percent
this week, saying the outlook for British inflation in coming months
looked weaker than it previously thought. Official figures on
Tuesday will likely say it remained at zero last month.
Other central banks meeting next week include those of Peru, Chile,
Indonesia, and South Korea but no policy change is expected from any
of them.
It had been hoped emerging countries would be the driver behind the
global recovery but many of those economies are now in turmoil and
Lagarde told policymakers gathered in Peru for the IMF's annual
meeting the world was stuck in a "new mediocre" growth pattern.
Rate setters have little room for error in a low-growth world in
which over-leveraged and commodity-dependent emerging economies and
a slowing China are major risks, top international financiers said
at the IMF meeting on Thursday.
(Editing by Toby Chopra)
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