Amid a global slowdown in economic growth that has seen central banks lower interest rates near zero or below in an effort to provide stimulus, here’s a look at which of the major economies are on high recession alert.
Hong Kong–while not a country, has seen five months of citizen protests that have battered the city’s economy, sending it into a “technical recession,” with industries like tourism and retail especially hard hit from the ongoing turmoil.
The U.K., with its ongoing uncertainty over leaving the European Union (and still no end in sight), has watched its economy recently shrink for the first time since 2012, and a no-deal Brexit could well slide it into a recession.
Germany, the EU’s biggest economy, is set to slide into a recession thanks to a continued decline in its manufacturing sector as well as lackluster global auto sales.
Italy, the EU’s fourth-largest economy, was in a technical recession for the second half of 2018 and has faced continued economic woes from weak productivity, high unemployment, huge debt and political turmoil.
China’s economy has continued to slow amid the trade war, too, although not yet nearing a recession: The IMF forecast only 5.8% growth for the world’s second-biggest economy (in terms of GDP) in 2020, down from 6.6% in 2018 and 6.1% forecast in 2019.
Other highly stressed economies around the world include Turkey, Argentina, Iran, Mexico and Brazil, among others.
The world economy will only grow 3% this year, according to IMF estimates—that’s the slowest rate of expansion since the global financial crisis started in 2008.
With central banks around the world trying to keep interest rates low, more people in rich nations like Europe, Japan and the USA are hoarding cash—but there’s an opposite trend in emerging economies like Russia, China and India, where cash as a percentage of GDP is decreasing.
The U.S. stock market, on the other hand, just hit another milestone, as the S&P 500 set a new record high on Monday. U.S. economic data has held steady by some metrics, though signs of a slowdown are starting to emerge:
Manufacturing is contracting and inflation remains fairly low, even as consumer spending and fabricated employment levels stay strong.
Trade uncertainty has continued to cause market volatility, while Wall Street is increasingly watching the Fed for added stimulus to prop up slowing growth and reduce pressure on the yield curve, which has been inverted since May—yet another recession indicator.
In spite of the bull market’s years-long expansion, the global economic slowdown has continued to set off multiple rounds of fluctuating predictions that the USA will inevitably fall into a recession—with current odds for a downturn in 2020 at 27%, according to Bloomberg Economics.
Forbes / ABC Flash Point News 2019.