Tuesday, July 23

The dubious evolution of the world economy: similarity to Hollywood

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Evolution of the world economy: when everything goes not as it was planned

As is known, Hollywood film producers do not know what will happen to their picture: success or defeat. The same happens with the world economy in 2019: it is difficult to predict the development.
Financial markets, oil prices, political situation: all these are trying to manage, but not with the predicted result. For example, the Apple Corporation has honestly admitted at the end of 2018 that it has no idea how many products will be sold in the Asian markets in 2019. The reason is simple: the trade confrontation with China has only increased, and few people know whether the events will end with a truce. If we take into account the forecasts of oil traders model November 2018. Most were confident that the brand Brent will jump to a record level of $ 100 per barrel. It was a great disappointment when it was not guessed twice: December was marked by the price of $50. The stock market is predicting a blossoming economy. Pessimism reigns in the bond market. But after a while, the participants made a 180-degree turn and began to predict the diametrically opposite.
In January 2018, the players were confident that they would have a successful year. Central banks rejoiced the most in hopes of curtailing the incentives. Investors assumed an increase in stock prices. But they did not guess: the year brought a lot of surprises, which are waiting for everyone in 2019.

Evolution of the world economy: not yet the time for optimism

In general, most experts expect that 2019 will pass without serious crises. In particular, the World Bank has reduced its forecast of global economic growth by only one tenth – from 3% to 2.9. Many people are surprised by the behavior of financial markets, but it is worth recalling: they are secondary to economic and political changes.

Recession is expected in the U.S. economy. This is normal after almost 10 years of recovery. If things develop differently, then the world will see the longest period of recovery in history. What else could lead to a recession? High interest rates. The problem is also the rise in energy prices, but in 2019 such a scenario is unlikely. OPEC countries had to reduce their oil production to reach a barrel of oil at $60. Landslides are also possible in the real estate market.
Small crises often stop world leaders from trading conflicts, wars and mismanagement of budgets. But, unfortunately, all these are the norm for 2018-2019.
So, what really important happened in the world (and will backfire in the future)? Financial tightening in the EU countries, higher interest rates in the U.S., the U.S.-Chinese trade conflict, which risks ending in unpredictable consequences. The process of dedollarization of sanctions countries and their partners.
How are countries trying to deal with the challenges ahead? China has softened its macroeconomic policy, and the yield of U.S. Treasury bonds has returned to levels observed in January 2018.
What will happen in 2019? As in Hollywood: no one is sure about the final result.


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