According to London’s financial analysts, there is now a one-third chance that the world economy will be recession in the next two years.
One of the most prestigious London-based economic and business analysts, Center for Economics and Business Research (CEBR), on Monday, recalls that the company taxed the global recession probability a year ago at only 20 percent.
According to CEBR analysts, however, it is not just a matter of global business cycles, but also that the emerging trade conflicts, the euro area problems and emerging economies can be linked to simultaneously acting factors that can slow the world economy.
CEBR uses the technical definition of the International Monetary Fund (IMF) to determine the global economic recession. Accordingly, the global economy will be recession if the per capita global GDP (GDP) per capita and at least one global macroeconomic indicator such as per capita investment, per capita consumption, industrial production trade value – decreases simultaneously.
The house emphasizes that the II. Since World War II, there were only four world economic recessions that met this criterion: in 1975, 1982, 1991 and 2009.
According to the CEBR study, it is difficult to predict when exactly the next such recession will be, but it is clear in the summer that five major downside risks are burdened by the world economy over the next two years.
The first is that the United States and China, the world’s two largest economies, have been involved in trade disputes, and this has become a full-fledged commercial war for the past few weeks.
CEBR recalls that, according to some institutional investors, this conflict may last for up to 20 years, as neither party is willing to retreat or compromise.
According to the company, in Europe, the eurozone leadership and the Italian coalition government’s budget battle is getting hot because Rome has come up with a general government plan that would, at best, only stabilize – but more likely to further increase – the current government debt ratio of 132% rate.
The company also cites the world’s growth risks as global stock markets are now very high priced, and in this situation there is a market downturn in the market that can affect trust and spending.
The fourth risk factor in CEBR’s study is that, according to monetary data, the increase in global money supply slows down as interest rates rise.
The wider M2 financial indicator in China, for example, rose by 6.6 percent – half the rate of one year earlier – in the twelve months ended June.
However, the global emerging area also struggles, partly due to the tightening of the monetary tightening in the United States and the steep rise in the dollar, “highlight CEBR London analyst.
Global growth risks were also highlighted by other major London houses in their recent analyzes.
The Oxford Economics financial and economic analyst said in a recent statement: although the global recession is far from being based on expectations, and believes that there have been more risky times since the global financial crisis, however, it is considered that the recent cyclical risks example.
The house also lists the potential for a very sharp global wage growth spiral due to labor shortage deficiencies and the fact that, due to the resulting inflationary pressures, central banks respond to monetary tightening in spite of the recessionary risks, and these tensions are pushed by commercial wars, With the expected sharp decline in international bond buying in 2018-2019, global liquidity will begin to shrink, and the situation will be worsened by the strengthening of the dollar.
Oxford Economics analysts have reported on this latter factor: in particular, the reduction in the quantitative easing cycle of the Euro bank (ECB) makes it unlikely that the value of international bond purchases will fall to $ 500 billion this year next year and next year by $ 1200 billion last year.
The house said, “the yellow-red warning system currently used by the yellow-red warning system it uses is” yellow lights blinking “.