The slowing down of the world economy is a big question in the financial market. On Friday, the US’s partial trade agreement with China has given investors happiness and the UK may seek a divorce agreement with the European Union. But the debate will soon begin on how close the world economy is to its first recession since 2019.
A discussion will be held this week at the annual meeting of the International Monetary Fund in Washington. According to Bloomberg Economics’ Global GDP Tracker, the global GDP rate slowed to 2.2% in the third quarter, down from 4.7% in early 2018.
According to IMF’s new boss Kristalina Georgieva, the recession will only grow further in the coming future, with the global growth rate cut by 3.2% on Tuesday which was already weak since 2009.
Equity investors have sent the MSCI World Index up 14% this year — 14 trillion-dollar bonds are negatively impacted, according to bond investors reports.
According to Tom Orlick, a Bloomberg chief economist, there are many things that need to be corrected to overcome the global recession.
Reason for Slowing Down World Economy:
Trade war – Undoubtedly trade war is the major concern about the slowdown of the world economy. US President Donald Trump’s trade confrontation with 18-month-old Chinese leader Xi Jinping has already put global development under pressure. China’s economic growth slips to 17-years low in august.
Manufacturing malaise – Undoutdely Global manufacturers are the main victim of the trade-war as global manufacturing is contracted for five straight months.
Geopolitics – Global politics is a major concern and makes a negative impact on the world economy. As the US is at odds with Iran after a drone attack on Saudi Arabian oil field. After the US-China Skirmish, the UK and the EU have yet to close the Brexit deal.
Other countries like Argentina, Peru, Ecuador, and Venezuela have their own political issues.
And, there are some other various reasons like Profit Pinched, Squeezed Central Banks, Reluctant Governments of slowing down the world economy.