Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Monday, January 21, 2019 04:27:51 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Clouds hovering over global economy

By
06th-Jan-2019       
Comments
Share your thought
Post a comment »
Read all () »

Andrew Walker :
What does 2019 have in store for the global economy? There are certainly clouds on the horizon, but 2018 as a whole was a reasonably strong year. Global growth will probably be about 3.7% when all the numbers are in, according to the International Monetary Fund. The world's two biggest economies are likely to record respectable rates of expansion.
The biggest of all, the US, had two very strong quarters in the middle of the year. Data for the final three months will come at the end of January, and while they might well show some slowing down, the whole year is likely to register pretty strong expansion of close to 3%.
As for China, the slowdown after three decades of stunning growth continues. But it's still likely to be about 6.6% in 2018, which is more than enough to generate significant improvements in average living standards. Most mainstream forecasts suggest that the recovery after the great recession will continue for another year and more.
So what about the clouds?
Growth in the US is likely to be slower. The surge in 2018 reflected President Trump's tax cuts. There is some debate about whether the impact will last. Is it a one-off effect that will fade like a sugar rush, or will it have a lasting impact on incentives to work and invest?
There is also the impact of the central bank, the Federal Reserve, to consider. Will it continue raising interest rates to keep inflation close to its 2% target following the four such moves it made in 2018?
President Trump certainly thinks the Fed could do a lot of harm. It is, he has said, "the only problem our economy has". He has repeatedly made similar points, to the extent that his Treasury Secretary, Steve Mnuchin, felt the need to say publicly that the president had no desire to sack the Fed chairman Jerome Powell. (It's not clear whether he has the authority to do that, but he certainly could decline to give him another term as chairman when the current one expires in 2022, if he is still president then).
In any event, the prospect of the president exerting what many would consider undue influence over the Fed has the potential to unsettle financial markets. The Fed has been given responsibility for monetary policy, which includes interest rate policy, by Congress.
The mainstream view among economists is that keeping that away from the centre of the political arena is better for the long-term control of inflation. There is another strand to President Trump's economic policy that could undermine economic growth: international trade.
The US is already well into a major trade confrontation with China over what President Trump calls the theft by China of the technology of American companies doing business there. Three months into the year, the tariffs that his administration has already imposed on a wide array of Chinese goods are due to increase from 10% to 25%. China can be expected to retaliate as it did to the first round of tariffs.
It is true that Presidents Trump and Xi have held some talks and it is possible that the escalation will be averted. But it is certainly not assured. And then there are the US tariffs on steel and aluminium, ostensibly imposed to protect national security, which have affected a large number of US trade partners. The prospect of continued trade tensions is a significant cloud over the economic outlook.
European slowdown
Europe also has its own problems. The economic data for the third quarter of the year showed a marked slowdown in growth in the eurozone. Some of this may be a very short-term stumble due to new procedures for testing vehicle emissions, which have disrupted the motor industry. But it could be the start of a more significant loss of momentum in a recovery that was never particularly strong.
A survey of manufacturing industry in the region showed the slowdown continued in December with a contraction in two individual economies, Italy and France. Europe also has its own trade issue to worry about: Brexit. The UK is due to leave the EU on 29 March. There is a wide range of possible outcomes, some of which could disrupt trade between the UK and the continent.
Stock markets had a rough ride at the end of 2018. Many recorded strong gains early in the year that were more than reversed. Overall it was the worst year for global markets (and many individual ones) since the financial crisis. Lower share prices can be a warning sign of wider economic problems ahead, sometimes even a recession. But share price falls are not a reliable sign of a coming recession.
As the late Nobel prize-winning economist Paul Samuelson once joked: "Wall Street indexes predicted nine of the last five recessions." The market can give false alarms. The bond market, where debts including government bonds, are traded, has also been close to flashing a warning about the US outlook. A phenomenon known as the inverted yield curve has been a more reliable predictor of a downturn, though not very precise as to when.
That said, there are economists who think the US may be heading for a recession, not this year but in 2020. Nouriel Roubini, who foresaw the financial crisis, is one. He also warns that the recession he predicts will be harder for the government and Federal Reserve to deal with.
China also has things to worry about - in the shape of a rising burden of public and private-sector debt, which could yet undermine financial stability. Surveys of business showed that new orders for manufacturers declined in December, for the first time in two years. All things told, there are some pretty clear reasons for regarding the outlook now as a good deal harder to read and more overcast than it has been for several years.

(The writer is BBC World Service economics correspondent)

Tariff
Add Rate

News Archive

Inside The New Nation

Entertainment »

Munmun, Achol`s movie Ragi


Sheikh Arif Bulbon :Last week shooting of Mizanur Rahman Mizan directed movie Ragi again started at BFDC in the capital’s Karwanbazar area. In the middle days, its shooting was stopped. This time Achol has been attached with the movie. After Achol’s engagement in Ragi, its shooting got momentum. In the ...

Sports »

Ko, Ji charge to LPGA lead with Henderson one back


New Zealand's Lydia Ko and South Korea's Ji Eun-hee each fired a five-under par 66 to share the lead after Saturday's third round of the LPGA Tournament of Champions.Ko and Ji charged into contention by going low on the front side and parring their way home to stand on 13-under ...

Football »

Salah fires Liverpool seven points clear, Arsenal rock Chelsea


Liverpool moved seven points clear at the top of the Premier League as Mohamed Salah's double inspired a dramatic 4-3 victory over Crystal Palace, while Arsenal ignited their top-four bid by beating Chelsea on Saturday.With second-placed Manchester City travelling to bottom-of-the-table Huddersfield on Sunday, Liverpool seized the chance to tighten ...

City »

Prime Minister Sheikh Hasina being greeted by Home Minister, secretary and IGP during her visit to the Home Ministry yesterday.


International »

Trump offers 3-year protection for immigrants in exchange for border wall


The Washington Post :President Donald Trump on Saturday offered Democrats three years of deportation protections for some immigrants in exchange for $5.7 billion in border wall funding, a proposal immediately rejected by Democrats and derided by conservatives as amnesty.Aiming to end the 29-day partial government shutdown, Trump outlined his plan ...

Cricket »

Rangpur Riders beat Sylhet Sixers


Sports Reporter :Rangpur Riders beat Sylhet Sixers by four wickets in their match of the UCB 6th Bangladesh Premier League (BPL) T20 cricket at Sylhet International Cricket Stadium on Saturday.Chasing Sylhet's fighting total of 194 for the loss of four wickets in 20 overs, Rangpur Riders reached the winning target ...

Sports »

Virat Kohli attends Australian Open, posts picture with Roger Federer


The Indian team completed its most successful campaign Down Under as they won the Test and ODI series comfortably. After close to two months of energy-sapping cricket, skipper Virat Kohli along with wife Anushka Sharma looked in a relaxed mood and attended day six of the Australian Open in Melbourne ...

Entertainment »

Alia , Madhuri Nene on the set of Kalank


Alia Bhatt, Varun Dhawan, Madhuri Dixit Nene, Aditya Roy Kapur, Sanjay Dutt and Sonakshi Sinha star together in Kalank. Dharma Productions' next, Kalank, is being directed by Abhishek Varman. The film's shooting is currently on and Varun Dhawan wrapped up shooting for his part of the film just yesterday. However, ...

International »

Afghan Taliban reject talks with US in Pakistan


Reuters, Peshawar :The Afghan Taliban rejected reports in the Pakistani media that they were prepared to resume meetings with U.S. special envoy Zalmay Khalilzad in Islamabad and repeated their refusal to deal directly with the Afghan government.Pakistani newspapers and television stations reported that a meeting in Islamabad was in prospect ...

Editorial »

Bravery and courage of a Bangladeshi expatriate


FOR bravery and courage, a Bangladeshi expatriate has been honoured as he saved the life of a three-year-old boy in UAE. Bangladeshi expatriate Farouk, who works as a welder in Ajman of UAE, rescued the child thrown from the balcony of a burning apartment by his mother.Bangladeshi community in the ...

City »

Law enforcers stand guard for security measures on the occasion of victory rally of Bangladesh Awami League in the city's Suhrawardy Udyan. The snap was taken from TSC area of Dhaka University on Saturday.


City »

Information Minister Dr. Hasan Mahmud speaking at the extended meeting of Awami League at the party office in the city's Bangabandhu Avenue on Friday.


.

International »

Modi's pre-election handouts to cost India billions, breach fiscal targets


Reuters, New Delhi :A series of vote-catching measures planned by Indian Prime Minister Narendra Modi as he braces for a difficult general election may cost more than 1 trillion rupees ($14 billion), two sources with direct knowledge of the matter said.Much of the cost of the extra spending or revenue ...

Cricket »

Dhoni, Jadhav power India to ODI series victory


Agency :MS Dhoni and Kedhar Jadhav scored half-centuries as India won the third and final ODI against Australia by seven wickets at Melbourne on Friday to seal the series 2-1.Chasing 231 to win, Dhoni (87*) and Jadhav (61*) put together a 121-run partnership to take India home after the bowlers, ...

Entertainment »

Achol returns acting slowly


Sheikh Arif Bulbon :Popular film actress of present time Achol has returned to acting but with the appearance of anger. Her elder sister Moonmoon is attached with the underworld. When she knows the matter she becomes anger. Achol will be seen by this way in Mizanur Rahman Mizan’s movie Ragi. ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news