The global economy is slowing down, and there are a lot of questions regarding the state of affairs in the economy. However, one of the major questions, if not the most important is what will happen in the future. Also, it is important to mention that due to various factors it is hard to say how long it will take to improve the situation.
Switzerland’s largest bank warned that a global economic recovery would a lot of time. Also, the pace will be lower than expected by investors. According to the global head of economics and strategy research at UBS.
Arend Kapteyn spoke at the UBS European Conference in London. Kapteyn stated that global growth levels on an annualized basis are about 2.6%. The situation is not going to change for the next three quartets.
Switzerland’s largest bank is another organization that highlighted the current socioeconomic situation.
In October 2019, the International Monetary Fund (IMF) changed its forecast when it comes to economic growth in 2019 and 2020. According to the new estimates, global growth would be 3% in 2019. It means that in comparison with 2018, global growth would decline by 0.3%.
The situation will remain quite difficult in 2020 as the global growth would reach 3.4%. The previous forecast was that the global economy would grow by 3.6%.
U.S.-China trade war and the global economy
The trade war between the two largest economies in the world remains one of the biggest threats to the global economy. Even though this trade dispute started more than a year ago, it is not over yet.
Hopefully, U.S. and Chinese representatives reached an agreement in October. However, this deal does not mean that the trade war is going to disappear from the agenda. The “phase one” deal will help to reduce the tensions between the two sides. However, this won’t be enough to deal with all of the problems.
Another issue is that the exact date and venue when U.S. President Donald Trump and China’s President Xi Jinping will sign the “phase one” trade deal remains unknown. Moreover, as long as this question remains open, it is hard to say that the U.S. and China are ready to reach sign a comprehensive deal.
The head of economics at UBS also talked about other problems that are related to the global economy. Kapteyn mentioned that there is a danger of a “real disconnect” in financial markets. At a time of weak economic data, it will be harder to achieve a breakthrough in U.S.-China trade talks.
Trump criticized the Federal Reserve
On Tuesday, Donald Trump spoke at the Economic Club of New York. He talked about the Federal Reserve and criticized its policies. According to Trump, due to the policies of the Federal Reserve, the U.S. economy and stock market are experiencing problems.
It was not the first time when Trump criticized the Federal Reserve. In the past, he also made comments about the Federal Reserve as well as about the chairperson of the Fed. Trump insists that Federal Reserve should reduce the interest rates. The idea is to make the U.S. more competitive in the global market.