Economy

US and European consumers are getting thriftier as the economic downturn caused by the credit and housing crisis continue to rampage. And this gloomy consumer spending and confidence will ultimately find its way into the emerging markets that have so far been able to withstand the storm.US retail sales is expected to dip 0.1% in July this year, despite the US$100 billion in tax rebates given by the US government. Some analysts said that out of the US$100 billion, only US$20 billion was spent, with the rest being squirreled away for tougher times ahead.

In the Eurozone, June retail sales dropped 3.1% from a year earlier, the biggest annual decline on record.

And adding to the woes, the supply of money in the economies is beginning to dry up as banks become less reluctant to provide loans.

Although emerging economies have managed to weather the storm so far, with the export-orientation economy, any fall in consumer spending and confidence in the US and Europe will have an adverse impact on the growth of those countries.

On Aug 1, a report showed that China’s manufacturing sector contracted in July for the first time since a monthly purchasing managers’ survey was launched in 2005. And more countries are expected to follow suit.

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