A few years ago, the world economy was developing well, but the conflict between the two countries changed the whole situation radically. Complex trade relations between the U.S. and China have led to a number of shifts in power and markets, which forced experts to revise their forecasts for the future. The prospects for global growth have decreased significantly, and it is unclear how the situation will be resolved to the end.
Prospects for global growth: what to expect from the world economy
Following the trade war between the giant countries, Argentina and Turkey experienced difficulties in macroeconomics. There is instability in monetary policy in a number of European countries, which before the current crisis showed good growth rates. All these factors have aggravated the situation in the world market.
Experts have revised previous forecasts of economic development. The new analysis showed that growth rates will decrease to 3.3%. The forecast takes into account the situation in Latin America, Europe, as well as the USA and Australia.
Despite the current difficulties, the state of the world economy will improve by the end of the year. This is supported by the implementation of measures to support the monetary system, which gives results due to stable inflation indicators.
Currency rates in Japan, UK, USA and EU countries do not show sharp fluctuations. China has also introduced a number of measures against the negative impact of rising trade duties.
Negotiations between the US and China aimed at reducing tension between the countries allow for hope for good prospects of the world economy.
Many states pursue a thoughtful policy to soften the current situation. Emerging market countries are strengthening their national currencies and reducing their debt to the IMF.
Based on these factors, experts predict economic growth to 3.6% next year, but provided that the countries continue to implement policies to maintain and stabilize the monetary system.
Growth and improvement are expected in Turkey and Argentina, which are currently in crisis.
There will be no significant change in the performance of the developed economies.
China and India will increase their growth rates, they will strengthen and improve their position in the world market.
One should not forget about the risks of the economy. Despite the reduction of tension in trade issues between the US and China, other difficult situations may slow down the pace of development. For example, now there are difficulties in the segment of automobile industry, and the first consequences have already been felt by Germany. Processes related to the UK’s exit from the EU remain a problem. Another risk is a tightening of financial policy and an increase in debts to banks.
To avoid a crisis on the world market, a number of measures should be taken already now to stabilize the currency exchange rate.