Let’s face it; the world is a complete mess. Whereas 2015 may have brought some you individual joy and accomplishment it really wasn’t a good year for humanity in general. In addition to natural disasters, the rise of the Islamic State and the Syrian refugee crisis, (and then there’s Donald Trump of course) 2015 ended on a pretty horrid note for the global economy as well. One doesn’t necessarily need to be a student of economics to understand just how many factors across the world are playing a role in worsening economic conditions and financial markets. While many economists are talking of the “next financial crisis” some relatively more optimistic ones claim that the situation “could be worse”.
So what exactly happened? For starters after the 2008-09 financial crisis, economists expected emerging-market countries often called developing countries to start growing and uplift the global economy, which is what was happening until many of these economies started slowing down and suffering set backs. Whereas this isn’t true for all developing countries at the moment (India being an obvious exception), Brazil and Russia falling into recession, South Africa, Thailand and Turkey plagued with high levels of short term debt and China’s worst slowdown in decades as a result of its transition from manufacturing and investment to services and consumption (among other things) are factors that are cause for concern to say the least.
Simultaneously Europe continues to try and tackle the Syrian refugee crisis and fight its economic woes at the same time. Whereas the EU managed to avoid a meltdown over Greece last July, it continues to face the risk of debt crisis, turbulent political conditions, aging populations and slow productivity growth. The only seemingly saving grace for the continent at the moment is that oil prices continue to remain low and currencies weak keeping the economy on a positive (although not exactly strong) growth trajectory. The situation in the US may be better than what is was eight years ago but the US cannot afford to turn a blind eye to the events taking place around the globe. The weakening global economy may not have been as significant to them had the US economy been booming but till date it remains quite average with American citizens and firms still recovering in some ways from the financial crisis. However as the nation gradually emerges from recession and the Federal Reserve Bank plans on raising its rates of interest after nearly ten years emerging markets will take an additional hit as investment will start flowing away from them and towards the US once again.
Thus it is nearly impossible to give a concrete picture of the global economic situation at any one point in time because of its volatile and unpredictable nature. With commodity prices collapsing, political conditions changing, economies slowing and investment fluctuating the only thing that can be said with any certainty is that 2016 does not show any indications of being a quiet year .
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