Top 6 Potential Risks to Global Economy
“Is the global economy heading toward yet another crash? At least, there’s been enough market turbulence to think so.”
Despite the encouraging headline growth figures, the global economy is facing a confluence of risks, which could inflict significant damage on longer-term development prospects and severely disrupt economic activity. These risks include high debt levels, reeling emerging economies, trade conflicts, and others.
As the outlook for the world’s economic growth worsens, the Germany international broadcaster DW (Deutsche Welle) has identified a number of risks for global economy in 2019.
High Debt Levels
The world’s aggregate debt has increased by 60 percent since 2008, with $182 trillion worth of hole in public and private coffers to be plugged. People are wondering whether there are any funds left to soften the impact of a potential economic downslide.
Reeling Emerging Economies
The vulnerable emerging markets account for about 40 percent of global economic output. Thanks to the help of foreign funds, many of these nations crank up their economies. But they’re highly dependant of the US interest rates.
Lately, the US and China have slapped tariffs worth $360 on each other’s products. The IMF stated that should the bilateral trade conflict escalate, global trade volumes would decrease by 17.5 percent in 2019.
Accounting for 40 percent of the financial system in the EU, shadow banks engage in financial dealings outside the regular banking sector. It is so massively concerning and could easily weather a financial crisis.
US Economy to Peak Soon
Thanks to the tax breaks and trade barriers policy, American economy is still booming. However, the IMF believes that it will slow down from 2019 on as many companies are increasingly reluctant to make big investments with all the uncertainty around.
Italian Government Policy
Despite standing at a troubling 130 percent government debt-to-GDP ratio, populist parties in Rome are pushing for a universal income and a lower retirement age. Currently, Italy is logging the EU’s biggest debt at around €2.4 trillion.
For more information and in-depth reading about top global economic risks, read the full article by DW in the link below.