Experts agree that the economic crisis is inevitable, but can see no symptoms of it immediate start. Besides the trade war, the United States and China, which could be the trigger of the global crisis
In recent months, a number of global financial institutions in its research reports often reported the worsening economic situation and gently hinting at the global storm, its strength is comparable to the global crisis of 2008-2009, or even surpassing it.
In April, for example, published an overview of analysts Morgan Stanley, in which he stated the completion of the current economic cycle. On the admissibility of the onset of the global recession in 2018 or 2019 as one of variants of development of global processes mentioned in the June world Bank report “Global economic prospects”. And in the July newsletter has lowered its earlier forecasts and the IMF. But the more outspoken analysts of Bank of America Merrill Lynch (BAML) — a world on the threshold of a new global financial crisis.
Western financial institutions allocate 7 factorsindicating the imminent onset of the global crisis, is able to become his triggers:
- high levels of corporate debt;
- the approach of corporate profits to peak levels;
- a strong dollar as a factor in the destruction of the markets of developing countries;
- the end of a 10-year cycle, regularity which is characterized the world economy over the past 50 years;
- a trade war between China and the United States;
- the flight of investors from equities to bonds.
10 year economic cycles is really a well-known phenomenon. The latest crisis is really separated from each other for 10 years (1987, 1998, 2008), this fact is pointed out by the chief economist of the world Bank, Shantayanan Devarajan. This is indicated by many experts, but none of this cyclicity is not economically justified, that is, its manifestation in 2018-2019 is not mandatory. To look for analogies in past crises, the employment prospects, as the market is constantly changing, improving and new tools for its correction and regulation. The crisis always comes from where you least expect it.
The reversal of expectations of traders in 180 degrees compared with the beginning of the year when the stock markets went up, also not can itself be the cause of the coming crisis — like behaviour of traders is generally a characteristic feature of the market at any stage.
With regard to the approximation of the profits to peak values, then it is too conditional factor, as this level becomes obvious only after reduction of income and in the forecast it can only be set “by eye”. Depending on what position you will want to look at a particular dimension.
URB.ua selected some of the most important factors that may actually be triggers of the global crisis, and interviewed experts about their influence on global economic processes.
On the one hand, unbridled growth of corporate debt do could potentially threaten financial markets. An example may be the debt crisis in Europe in 2011-2012, when corporations and banks that were short of liquidity, was a considerable state aid.
On the other hand, corporate debt is an inevitable consequence of modern economic development.
The Executive Director of the Center for social and economic research CASE Ukraine Dmytro Boyarchuk does not see a critical problem in the growth of corporate debt — she needs to grow as grows the world economy.
“The world’s debt is constantly growing. Debt market, it seems to me, never decreased. I would not undertake to determine, as a factor the inevitable crisis,” he said UBR.ua.
In other words, to call the growth of corporate debt as a risk factor for the global crisis — so blame the world economy is that it grows. Breathing is also harmful.
The outflow of capital from developing countries
The increase in the discount rate the fed today is really a significant factor from the point of view of provoking a crisis, but not of the world, and markets in developing countries. Strong dollar today, negative pressure on these economies, as it causes the outflow of capital from them in the United States.
“The refinancing rate in the US rises, and it means that there will be outflow of capital from emerging markets. This point is really dangerous, but we are talking about the crisis on the markets of third countries. They will start to develop actively at least. However, the world economy is based on the United States, the European Union and China, and yet they feel good” — said Boyarchuk.
That is, the outflow of capital will hit emerging economies, but will not trigger the global crisis.
Trade war US-China
Foreign trade — the Foundation of any economy, so no wonder the international financial institutions such attention to the unfolding trade war between the US and China — the two largest economies in the world and adjust to her given their forecasts.
A trade war with China may indeed become the catalyst for a new global crisis, but until the end is unclear — will. Experts say the threat from this side to provoke turmoil, but nevertheless, cautious in the estimates.
“A trade war is definitely a negative factor, because the narrow external trade operations and foreign trade the source of any economy, and States including. Will this be the trigger of the global crisis, while difficult to say: could be, could not be. It’s a risk, there are many factors that can each other to overlap. It is difficult to make certain predictions,” said UBR.ua Dmitry Boyarchuk.
Agree with him and the head of the analytical Department of the IR Concorde Capital Oleksandr Parashchiy.
“Yes, it can be a catalyst. If they are in their trade wars play to the fact that the price of any resource will decrease dramatically, then it really can trigger a chain reaction”, — he stressed in an interview with UBR.ua.
At the same time, the Parana noted that the recent jump in oil futures, which take place on stock exchanges are not serious to cause such a chain reaction.
But the Executive Director of the International Fund blazer Oleg Ustenko in the comments UBR.ua stressed that the trade war between China and the us can really shake the entire global economy, as the two giants clashed. U. S. economy at $19 trillion and China economy $13 trillion.
The impact of The global crisis on Ukraine
The global crisis hit Ukraine as a country with an emerging economy and it will be a serious shock to the domestic economy, which to such impact overall is not ready. However, this crisis, whatever it was heavy, will make the country stronger. Ukraine will be forced to carry out reforms that the IMF requires, and it will go in her favor, while the current role of the Monetary Fund as the curator of Ukraine can continue to play the role of “lifeline”. Because the Fund is focused just on working with countries in crisis.
Experts agree that the global crisis is inevitable, but not yet see symptoms to manifest it now. The only factor that can speed up the arrival of the global crisis and become a trigger is potentially a trade war between China and the US. But Donald trump has already proven during the Korean crisis, which is unpredictable able to negotiate with anyone. How will this time, time will tell.