Evolution of the world economy: when things don’t go as planned
As it is known, the producers of Hollywood movies do not know what will happen to their movie: success or failure. The same is happening with the global economy in 2019: it is difficult to predict the development.
Financial markets, oil prices, political situation: they try to manage all of this, but not with a predictable result. For example, Apple honestly admitted at the end of 2018 that it had no idea how many products it would sell in Asian markets in 2019. The reason is simple: trade confrontation with China only increased, and few people knew whether the events would end in a truce. If we take into account the forecasts of oil traders of November 2018 most were confident that Brent brand will jump to a record level of $ 100 per barrel. The disappointment was great when did not guess twice: December was marked by a price of $50. The stock market predicts the heyday of the economy. The bond market is pessimistic. But after a while, the participants made a 180-degree turn and began to predict the diametrically opposite.
In January 2018, the players were sure that they would have a successful year. Central banks rejoiced most of all in the hopes to curtail incentives. Investors assumed a rise in the price of shares. But did not guess: the year brought many surprises. Everyone expects in 2019.
Evolution of the world economy: this is not the time for optimism
In general, the majority of experts expects that the year 2019 will be without serious crises. In particular, the world Bank 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 stands to mention: they are secondary to economic and political changes.
The US economy is expected to recession. This is normal after almost 10 years of recovery. If events develop in a different way, then the world will see the longest period of recovery in history. What else can lead to a recession? High interest rate. Also, the problem is the rise in the cost of energy, but in 2019 such a scenario is hardly probable. OPEC countries had to cut oil production in order to reach a barrel of oil to the level of $ 60. There may also be collapses in the real estate market.
Small crises often stop world leaders from trading conflicts, wars and mismanagement of budgets. But, unfortunately, all of the above is the norm for 2018-2019.
So, what really important happened in the world (and will backfire in the future)? Financial tightening in the EU, raising interest rates in the US, the American-Chinese trade conflict, risking unpredictable consequences. The process of de-dollarization of sanctions countries and their partners.
How are countries trying to deal with the challenges ahead? China softened its macroeconomic policy, and the yield of the US treasury bonds returned to levels that could be observed in January 2018.
What will happen in 2019? Like in Hollywood: no one is sure of the final result.