The global economy may be experiencing difficulties, but it is not falling over, key stakeholders attending the World Economic Forum in Davos, Switzerland, believe. They explain that the expansion is weakening, but not enough to lead to a recession.
According to Bloomberg, the markets faced some difficulties lately, with the trade war between the US and China, Brexit and the US government shutdown, being the main issues. However, it is not all negative. Despite the fact that, global growth will be soft during 2019, in 2020 it will begin to increase again.
[smlsubform prepend=”GET THE SAFETY4SEA IN YOUR INBOX!” showname=false emailtxt=”” emailholder=”Enter your email address” showsubmit=true submittxt=”Submit” jsthanks=false thankyou=”Thank you for subscribing to our mailing list”]
The main concern is that China will not be able to protect its economy, as it experiences the slowest expansion since 1990. Nevertheless, Chinese officials said that the trade war will not affect the long-term vision that the country has for its economy and that slowing down will not cause negative impacts.
Moreover, key stakeholders are also concerned that central banks tighten monetary policy too aggressively. However, this could be mitigated as the Federal Reserve Chairman Jerome Powell is willing to show patience after raising interest rates four times last year.
Currently, in the major economies there is a possibility that the reaction to reduced growth will be looser monetary and fiscal policy. However, there are worries that if the next recession hits, central banks will not be able to react, because rates could be lower in comparison to the eve of previous slumps.
Regarding the US, in spite of the government shut down, Blackstone Chief Executive Officer Stephen Schwarzman believes that its economy will increase at least 2.5% this year, preventing recession. Today, unemployment hit the lowest in 50 years, being a positive sign, predicting faster wage growth.
