Economy

Commentary: Weaker growth prospects herald bad news for businesses and financial markets

0


NEW HAVEN, Connecticut: Only now are we becoming aware of the danger the global economy narrowly avoided in 2019.

According to the International Monetary Fund’s preliminary, world GDP grew by just 2.9 per cent last year – the weakest performance since the outright contraction in the depths of the global financial crisis in 2009 and far short of the 3.8 per cent pace of post-crisis recovery over the 2010 to 2018 period.

On the surface, 2.9 per cent global growth doesn’t appear too shabby. But 40 years of perspective says otherwise. Since 1980, trend world GDP growth has averaged 3.5 per cent.

For any economy, including the world as a whole, the key to assessing growth implications can be found in deviations from the trend – a proxy for the so-called output gap. 

Last year’s shortfall from trend (0.6 percentage points) brought growth uncomfortably close to the widely accepted global recession threshold of approximately 2.5 per cent.

AN ANOMALY

Unlike individual economies, which normally contract in an outright recession, that is rarely the case for the world as a whole.

We know from the IMF’s extensive coverage of the world economy, which consists of a broad cross-section of some 194 countries, that in a global recession about half of the world’s economies are typically contracting, while the other half are still expanding – albeit at a subdued pace.

The global…



Source

BlackRock urged to cut oil and gas stakes

Previous article

Mar-a-Lago Super Bowl party featured giant Trump football drawing

Next article

You may also like

Leave a Reply

avatar
  Subscribe  
Notify of

More in Economy