(Oct 2): The global economy flashed clearer warning signs on Tuesday as a wave of data showed manufacturing stuck in a slump, exports falling and sentiment sliding.

In the US, a closely watched factory index unexpectedly dropped to the lowest since 2009 -- driving down stocks as well as yields on Treasuries. Meanwhile the spectre of deflation resurfaced as South Korea, a bellwether for international trade, reported a drop in consumer prices and the Reserve Bank of Australia cut its interest rate to a record low.

With a trade war between the US and China still raging, industry executives from Germany to Japan and Russia complained of contracting business, and the World Trade Organization cut its forecast for commerce to the lowest in a decade.

Although a measure of Chinese manufacturing improved and consumer spending globally has largely held strong, the overall tone sounded of the world economy failing to rebound amid mounting trade tensions and rising Brexit risks.

That leaves the US and China and also the UK and European Union under pressure to resolve their differences, with central bankers and governments also having to find ways to support demand.

“There can be few precedents since the 1930s of global growth prospects being affected so significantly by trade policy disruptions,” Fitch Ratings Ltd. Chief Economist Brian Coulton said.

UBS Group AG economists reckon global growth is tracking just 2.3% at the moment, almost a percentage point less than at the start of the third quarter. Those at Danske Bank are warning there is a 30% chance of a global recession in the next two years. A global manufacturing gauge improved slightly in September, but employment fell for a fifth month.

While trade tensions are part of the story, there are also industry-specific issues -- autos in Germany, semiconductors in South Korea – adding to the hurdles.

German car-parts giant Continental AG last month laid out a sweeping restructuring plan that could affect as many as 20,000 jobs worldwide. Japan’s Kawasaki Heavy Industries cut its forecasts, citing sales to chipmakers.

Central banks around the world are fighting the slowdown with new interest-rate cuts and monetary stimulus. But they are also ramping up calls on governments to jump in with fiscal measures, saying they can’t do all the heavy lifting.

In the meantime, global bond investors are betting against a meaningful inflation pickup. Even with sovereign yields below zero, they are still piling into government debt, and so-called deflation trades are on the rise.

The latest purchasing managers indexes may reinforce those views. German manufacturers cut prices in September by the most in more than three years. In Japan, where manufacturing sentiment is declining, factories lowered selling prices for a fourth straight month. British companies warned of “Brexit uncertainty and clients routing supply chains away from the UK.”

Such an environment is worrying for central bankers in a world where inflation is already low and well short of targets. Consumer-price growth in the euro area slipped below 1% in September for the first time since 2016, falling further from the European Central Bank’s goal.

Parts of the global economy still show resilience, and services are still growing. US-China trade negotiations remain critical for the outlook, with a Chinese delegation set to visit Washington for talks this month aimed at hammering out a deal.

The decline in US manufacturing is an “amber light on the dashboard,” John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said on Bloomberg Television. “The Fed is very likely to cut again at the end of October as a result of this and so long as the trade-war situation remains as an overhang.”