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The 360 presents various perspectives on the main stories of the day.
What is happening:
After a decade of steady growth, the global economy has largely recovered from the Great Recession. However, a number of indicators raise fears of an impending contraction.
According to experts, many of the world's largest economies are showing signs of unrest. The two world economic leaders – the United States and China – are feeling the pain of an ongoing trade war that could last months or even years. Last week, the United States introduced a "reverse yield curve," a complex financial metric that took place before every US recession since the 1950s.
Experts said the economies of Germany, Brazil, Italy, Mexico and many other countries also had vulnerabilities. Uncertainty is exacerbated by fears of potential financial returns if the UK leaves the European Union in October without reaching an agreement on the terms of its departure.
Typically, an economy is considered in recession when it posts two consecutive quarters of declining gross domestic product. Some governments are using their own more nuanced measures to formally declare that their country is going through a recession.
Why there is debate:
Pessimistic forecasters say all these indicators point to an impending global recession. Periods of expansion and contraction are normal in all economies, but some experts fear that tensions between the United States and China, Brexit and the lingering effects of the Great Recession may worsen a possible downturn in the economy.
Despite the signs of an economic downturn, some experts say that there are also signs, such as the low unemployment rate, the strength of the global economy. "There is no recession," said Trump Administration Economic Advisor Larry Kudlow.
Others argue that even if negative signs indicate that a recession is imminent, there is no indication of when it will occur or how severe it will be.
Perspectives
Fears of a recession could trigger a recession.
"If we all think that there will be a recession, everyone will produce a little less in anticipation of a drop in demand. The recession has led to a decline in production. – Laura Veldkamp, Professor of Finance at Columbia University, Washington Post
Recessions are very difficult to predict.
"Are we headed for a recession? Nobody is certain. Rapid changes in the US and global economies are making reliable forecasts and indicators even more difficult than predecessors to the Great Recession of 2008. Moreover, economists are terrible in predicting recessions. – Perry L. Weed, Baltimore Sun
The trade war drives the global economy to recession.
"Not only is the trade war between the US and China no longer a" what if "in terms of the significant impact on global business activity, but its effects are spreading in a highly interconnected global economy."
– David Parkinson, Globe and Mail [Canada]
Trump's reaction to a recession could aggravate a recession.
"If a recession develops, it suggests a president who refuses to believe it and does nothing to avoid it or escape it. Or he admits there is a recession, but accuses the Fed of provoking it. If Trump did this, he would attack the credibility of the institution best able to fight the recession, and that is not how you will restore confidence in this recession. – Rick Newman, Yahoo Finance
China and the United States could avoid a recession by solving their trade war.
"It may be imperative to abruptly end the trade agreement, otherwise we would not have much time before the next recession begins." – Sven Henrich, CNN Business
A Brexit without agreement will reduce the global economy.
"The economic risks of Brexit may have been crudely mobilized for campaign purposes, but that does not make them imaginary. And each credible analysis clearly shows that the scenario of non-agreement is the most risky of all. – Editorial, The Guardian
The gravity of the Great Recession has made people prone to overreaction.
"The Great Recession continues to be of great concern to the minds and young Millennials who have entered the world of work as a result of this event are still lagging behind the Generation X and Baby Boomers in terms of accession. to the property and to have children. This is easily feared a recession, especially when there are some signs of contraction. – Emily Stewart, Vox
The Chinese economy will determine if there is a recession.
"Americans tend to think that their own markets and their own consumption are driving both the ups and downs. This may not be true this time. Instead, any recession can be made in China. … So, when China sneezes to change an old adage, the world can now catch a cold. "- Noah Smith, Bloomberg
We define a recession as a bad measure of economic health in the current economy.
"To avoid an overreaction, the discussion of economic health must evolve into measures that better capture satisfaction and contentment." – Ruchir Sharma, New York Times
The global economy has changed so much that the old predictors may no longer be applied.
"This is absolutely true: we are in unknown territory, beyond the panel 'here be monsters'. All economists, including economists, have no idea what will happen. – Neil Macdonald, CBC
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