The global economic crisis already on the threshold. Tensions in global trade could turn into an economic recession by the end of 2019. This forecast was made by Russian analytical rating Agency of ACRE. Signs of impending disaster and apocalyptic predictions no longer seem so incredible.
The next economic cycle, after which comes the inevitable global recession is coming to an end. So not far off a global upheaval that will affect everybody. A bomb could explode anywhere. Tensions in global trade could turn into an economic recession by the end of 2019, predicts Russian analytical rating Agency of ACRE.
“Low probability of a quick resolution to the trade conflict between China and the United States, and the threat to restrict United States trade with Mexico and other countries suggests that the negative cyclical trends in the U.S. economy since the beginning of the year can lead to stagnation or recession in some developed countries in 2019-2020”, — said in published on Tuesday a study of an ACRE.
Global financial markets threatens even climate change, worried Commissioner at the commodity futures trading USA Rostin Behnam. After 2018, natural disasters have caused damage to 160 billion dollars. But because of climate change those same floods, devastating the American farm, could become much more. Storm, drought, forest fires and other natural disasters lead to bankruptcies of companies and individuals. Banks not receive their payments on mortgages and loans, and insurers go bankrupt for the huge payouts. May be affected and the energy industry. Because the inventory valuation may be too high, and a significant part of the resources will never be mined. Inflated the cost of oil and gas companies just collapse.
However, climate change — the process is quite long. While there are clear signs of the onset of the recession in the near future. Moreover, future economic recession will be most powerful and will go down in history, according to the expert research team of Casey Research Doug Casey.
Professor of Economics at new York University Nouriel Roubini a year ago with his colleague Brunello Rose identified ten potential risks that can trigger global recession in 2020. Nine of these risks still persist, said Roubini, who previously was the chief economist for international Affairs of the Council of economic advisers under the President of the United States, then was the first Advisor to the Deputy Minister of Finance.
In General, economists identify several points on the globe where it can fly in “black Swan”. It is some unknown negative event that is so dangerous that it is impossible to prepare. Therefore, the “black Swan” leads to a collapse and recession, which like a house of cards destroys the economy of one country after another.
So, hit can from the USA. The us economy for the past 11 years shows a continuous rise. This record for the duration of economic growth without a recession in American history. This means that it approached the natural lifetime and should die soon.
Doug Casey is confident that the US economy is a house of cards that can emerge from a strong breath of wind, and a tsunami is approaching. Anxiety beat many economists. Concern is first and foremost a trade war with China, which leads to the reshaping of global markets. The aggravation of the struggle will lead to a slowdown in the global economy, reducing demand for energy, the problems in the banking sector and, ultimately, to global collapse.
ACRE experts believe that a trade war will lead to the decline of the American economy by 0.7% in 2020.
Another sign of the approaching crisis in the United States — inversion of the yield curve. This is an unusual situation where yields on longer-term yields falling below the yields on short-term securities.
It is considered the most accurate harbinger of the onset of the economic crisis in the country. At least, historical statistics of the last 50 years shows exactly that. In six such cases after such an inversion, the US has a crisis. However it happened immediately: the average recession took place in 311 days, that is about a year. In particular, it was in 1990, 2001 and 2008.
The only thing can help US is the reversal of the fed in the direction of lower interest rates, which more likely will happen this week. “If that happens, the recession in the United States will become less rather than more likely,” — writes in his article on Project Syndicate chief economist of Gavekal Dragonomics Anatoly Kaletsky. Last summer, Nouriel Roubini called the fed rate hike is one of the 10 risks to the global economy. And that’s the only risk, which this summer has disappeared, because the fed suddenly decided to soften its policy.
However, the danger lies in the actions of the American President in relation to Iran. For the sake of increasing their ratings Donald trump can organize a real foreign policy crisis, prompting the oil shock, which no doubt will lead the world into crisis. Now the point of tension is Iran, which were in the grip of some American sanctions, although China in spite of them continuing to buy Iranian oil. Just recently, the trump, at least, in words said that the United States can start a war with Iran over nuclear weapons. One hopes common sense that tells him not to bring the situation to armed conflict. Armenski Iran controls the Strait through which a significant portion of the world’s oil. If Iran will have nothing to lose, it will block the Strait, and a huge shortage of oil will kill a economy. In fact, Iran has already tickles the nerves: he was detained recently by the British ship. The US, the answer are going to create a coalition of different countries which will be engaged in patrolling the waters of the Strait of Hormuz, said the us Secretary of state Mike Pompeo.
However, trouble can come also from China.
One of the risks that could trigger a recession in 2020, is a commercial and technological war with the United States,
Roubini believes. If the US enters was exported, worth 300 billion dollars, and banned Huawei and other Chinese companies to use American components, then Beijing will respond too extreme measures. For example, would deprive American companies of rare earth metals that are needed including in the defense or close its market to American multinationals such as Apple. This is too much of a shock to the markets. Further escalation of this war will push the world into recession, and, regardless of what the major Central banks, says Roubini.
Even statements about what the parties finally agreed, in fact not lead to improvement of trade relations. “Both countries are drifting in opposite directions, so the space for compromise between them is narrowed, and the risk of a global recession and crisis in the global economy, whose condition is already fragile, increases”, — said Roubini.
Economists are afraid of the decline in the growth of the Chinese economy. They fear that at some point China will show a sharp slowdown, the consequences of which are unpredictable, but clearly catastrophic. This may provoke a sharp drop in the price of raw materials, and further along the spiral, which will affect commodity-dependent countries. On the other hand, affected and developed countries, which in the last 10 years began to actively sell their products to the middle class among the Chinese.
In addition, most of the Chinese economy are visible distortions in the form of overload, debt of both the state and business. Moreover, in the private sector it is most pronounced.
In ACRE I believe that if the U.S. economy next year will plunge into recession, then China will show a minimum for 25 years, the growth rate is just 4%.
However, shoot back, maybe Europe. Dangerous the mere fact that the Prime Minister went to Boris Johnson, known for his principled stance: he advocates Breksa at any price, even without a deal with the European Union. Markets spooked by this turn of events, the European currency became the outsider of day. But gold prices went up as investors flee to safe Harbor in the fear of the storm. So Euro now doesn’t look good, especially if the ECB will continue to ease monetary policy.
Kaletsky generally believed that Europe assumes a much more serious threat to the world economy than the USA and China. In his opinion, innocent Europe is a major victim of the trade war, the United States and China for the same reason that she suffered in the 2008 crisis more the United States, where the recession originated. he believes that Europe is again taking wrong decisions — and that is hard to save everything. While the US and China to stimulate its economy to offset export losses, the EC is trying to get Italy to be pressed down to reduce the national debt and raise taxes, while Germany reduces investment and postponing tax cuts in the budget surplus, simply because the surplus was below expectations. European banks are tightening the screws, resulting in a reduction in lending. No wonder the IMF has revised its forecasts for 2019 in the direction of a more serious decline of the economies of Germany and the Eurozone as a whole, while forecasts for China and the United States have not changed. After 2008, this policy led to a protracted post-crisis period in Europe, and it could happen again. However, experts ACRA predict that the EU economy will go into recession (minus is not), but its economy will remain stuck in stagnation — GDP will add only 0.2%.
As for Russia, then all the global risks increase and so to speak “own” risks. One of them is called mortgage crisis, which, however, is still under control of the Central Bank. The second is the risk of new sanctions against Russia. However,
experts ACRE reduced the probability of introduction of new economic sanctions against Russia. However, the global shocks from the trade war and a slowdown in global growth will hurt the growth of demand for traditional Russian export goods,
“If the steps from the point of view of regulation of the financial system will withstand the decline in exports without financial stress in the banking sector, the Russian economy may go through unfavorable period with growth rates of 0.4–0.9% in 2019. A more significant decline in external demand or in the event of inadequate control measures possible the onset of the recession — a decline to minus 2,5–3%”, — experts predict ACRE.
However, a number of economic instruments will help Russia to successfully survive the unfavorable period. In the first place is due to the accumulated budget rule reserves from oil and gas revenues. Secondly, the Central Bank may raise the key rate to combat currency fever and the Finance Ministry stopped buying foreign currency.
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