Sunday, October 20, 2019
Awfully high chance of global recession in the next 12-18 months, Moody’s chief economist says
Economist believe that their will be a global recession in the next 12-18 months and even if there is not recession the economy will be much weaker. Eswar Prasad, a professor at Cornell University said that consumer spending has helped economic growth in many countries but is not enough to help reduce the chance of a recession. In the International Monetary Fund’s World Economic Outlook report, the International Monetary Fund forecasted that the global economy will grow 3% this year and 3.4% next year. That is lower than the 3.2% and 3.5% that the International Monetary Fund projected in July. They blamed the subdued growth on the growing geopolitical tensions. Governments should increase spending to support the economy but many major economies won’t go down that route. With the tensions growing between the left and the right over the possible impeachment of Trump, it doesn’t seem very likely that Congress will pass any plans to cut taxes. Should families and businesses start preparing for a recession now, or do they have time to wait?
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Based off of graphs we have encountered during class, it does make sense historically for a recession to occur in the near future. This definitely seemed like it could occur sooner rather than later over the events occurring with China and the US over the last few months, however, with recent news of an agreement coming it could help to prolong the coming of the next recession. It will be very interesting to see what will happen if Trump is Impeached, as some economists predict the economy will grow strong as a result of having economic policy coming from someone with more expertise on economic development, but others are concerned it will struggle as uncertainty will occur with the change in political office. History shows us that impeachment has been good to the economy in the short run.
ReplyDeleteThough a recession may appear on the horizon, we must be careful not exasperate things. For instance, if everyone begins to prepare and protect themselves from a recession by liquidating their assets and saving their funds, then that will essentially be the cause of the recession. There will be a lack of investments as more money is held.
ReplyDeleteI think that preparing for a recession is probably a good idea, but I also think there is a fine line between being prepared and being in panic mode. We must ensure we do not panic as that could be the spark that takes us into a recession.
ReplyDeleteI agree with Matt. We should be preparing for a recession. If we prepare and are ready for it when the recession happens then it will not be as harmful than if we were just to continue with what we are doing now.
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