The global growth slowdown now looks contagious.

China has been slowing for the past several years. The Chinese government has tried monetary ease, currency manipulation and bank lending mandates to prop up growth, but it’s not working. Chinese corporate defaults are on the rise. The situation in Europe is no better with Italy, France and Germany all coming close to recession and with continued declines in the forecast.

The U.S. has been doing better than Europe, but the trends are not encouraging. U.S. growth slowed to 2.2% in the fourth quarter of 2018 and is set to slow to 1.7% in the first quarter of 2019. With Europe, China and the U.S. all in slowdown mode, what else could go wrong?

The answer is Japan. Many signs are emerging that Japanese growth is slowing and a recession may be on the horizon. This article describes how the latest Bank of Japan business confidence survey hit a two-year low. Other surveys are showing additional signs of slowing or negative growth.

Japan is planning a major sales tax increase this year that may give the economy a temporary lift (as consumers rush to beat the tax increase), but will end up slowing the economy once the tax is in place and the accelerated demand comes to a grinding halt.

In short, all of the Big Four global economies — the U.S., China, Japan and Europe — are slowing and monetary policy seems helpless to stop the decline. Get ready for synchronized global declines in growth and perhaps a global recession in the year ahead.

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