The monetary fund’s declining growth rate isn’t the singular issue spelling doom for global economies. Its latest semi-annual review forecasts a drop from 3.5 (January) to 3.3 percent. Looking back, it ended the last quarter of 2018 on a slow downward trajectory from 4 (annual) to 3.7 percent in October.
The devastating impact such minute trims have on world businesses and entire nations, bemuse naysayers. Economists single out two primary contributing influences for the slump and anticipate further disruptions. What else, if not the debilitating effects of Brexit and the unabating US-China trade disputes.
Weakest links strangling Europe
With a spate of long-term socioeconomic issues, Italy plummets deeper in debt. Germany sluggishly creeps towards recession. Greece and Ireland neck deep in debt, grappling with the hope of EU safety nets buttressing their efforts when needed. An authority on financial matters, professor Joao Gomes, insists the recent revision assuages the imminent peril awaiting vulnerable countries.
Former monetary fund European departments/research deputy director, Ashoka Mody echoes similar sentiments regarding the situation. China’s maturing economic status and aging societies remain a constant concern as it continues to shape global economic growth. The two predicts moderate transitory growth for the monetary fund into 2020, though, not as ambitious as their recent review.
Will Chinese balloon bursts trigger global panic?
Professor Mody delves into international economic policies to explain why China’s shrinking growth rate matters. As the economic fulcrum underpinning world economies, including Europe, Africa, the US, and Latin America, China’s prosperity shapes global trades. The likelihood of the once-ballooning Chinese economy slowing down is a given, according to Mody. However, there’s no indication the powerhouse is incapable of survival, should it slither into recession.
Neither is there a precise timeline denoting how soon it will fall. With the nation’s resources thinning, any ambition of surviving a modern-day recession is sparse. Australia, a once-booming economic giant, is yet to recuperate from the last collapse. Gomes’ emphasizes the crippling effect this would have on the booming European automotive industry.
Monetary drought? No rescue
As productivity slows for economies on an international scale, powerful nations fear collapse. The possibility of economies strengthening within the next decade looks bleak. Central banks, particularly that of Europe have dried, putting an end to monetary and fiscal policy borrowing. With an almost powerless Europe, as the weight of debt-ridden nations slowly upending its entire economic ecosystem, China’s growth losing momentum; isn’t this a combination for a recession? With incredible financial burdens stretching the arms of recession; Italy is but a moment away from death. With a sovereign debt that compares to that of France and Germany combined, redemption is a no-win situation.
Of course, a new-age recession would devastate nations. With no sensible recourse to remedy existing problems, global economies head for collapse. The strongest have struggles of their own as they look towards a sustainable future. Europe’s future looks grim, seeing as much of its ecosystem survive on foreign trades.