Essay On World Economy

Essay On World Economy-74
However, these measures are likely to remain modest.Credit growth will continue to be constrained by the massive debt overhang and the government’s commitment to deleveraging, at least in the medium to long term.

These risks point to the increasing vulnerability of the global economy to further shocks, and the rising probability of a recession in the next couple of years.

Based on estimates about sustainable growth in the labour force and productivity, we assess the trend, or potential, growth in the US economy to be around 2.0%.

The US economy accelerated, thanks to fiscal stimulus enacted early in the year, while the economies of the Eurozone, the UK, Japan and China began to weaken. IHS Markit predicts global growth will edge down from 3.2% in 2018 to 3.1% in 2019, and keep decelerating over the next few years.

One major risk in the coming year is the sharp drop-off in world trade growth, which fell from over 5% at the beginning of 2018 to nearly zero at the end.

In 2018, US growth was well above trend at 2.9%, though the acceleration was almost entirely due to a large dose of fiscal stimulus in the form of tax cuts and spending increases.

The impact of this stimulus will still be felt in 2019, but will diminish as the year progresses.

The global economy started 2018 with strong, synchronized growth.

But as the year progressed, momentum faded and growth trends diverged.

The causes of the current slowdown can be summed up as the Three Ds: depopulation, deleveraging, and deglobalization.

Between the end of World War II and the financial crisis of 2008, the global economy was supercharged by explosive population growth, a debt boom that fueled investment and boosted productivity, and an astonishing increase in cross-border flows of goods, money, and people.

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