With the on-going trade wars amongst other things happening in the world, it is hard to avoid wondering if our economy is doomed to face a recession in the near future. Are we really on our way to yet another economic downfall just like we experienced back in 2008?
A recession is defined as a significant decline in the economy for at least six months. It is characterised by a drop in the following five economic indicators: real gross domestic product, income, employment, manufacturing, and retail sales.
- Escalation in US-China tariff war
- Slowing US growth
- Long recession in Germany
- Chinese debt crisis
- Recession and contraction in Argentina, Iran, South Africa, Turkey, and Venezuela
- Selling of short-term loans by investors in the bond market in anticipation of a recession
All of these factors involved a few countries. However, these countries have branched and wide-spanning international connections; US and China for example. This means that economic troubles in these countries will also spell trouble for the global community as well.
It has been predicted by economists Nouriel Robini and Brunello Rosa that the on-going global expansion will stay put as we enter a new year. However, the year 2020 will also be the point where economic conditions are sufficient to spark a global recession. This is due to factors such as:
- The impending inflation
- The dragging effect of the on-going trade disputes
- The upward trend of interest rates
All of these factors are brewing the perfect storm for an economic collapse.
With the signs pointing to a resounding yes, it is about time to step back and consider the consequences of our economic policies and decisions. More than the countries that they serve, leaders should also take into account the impact of their decisions on a grander scale. In a world that is becoming more and more connected, the last thing that we would want to do is build high walls for this is the quickest way for us to crumble.