[ad_1]
Qatar National Bank (QNB) said low interest rates would support the global economy despite constraints. The IMF cut its estimate of global GDP growth in the global economic outlook update in July, recognizing the upward drag that has been seen for some time. The weather, especially the US-China trade war.
In its weekly badysis released today, the Bank agreed that the risks to the future of the global economy were essentially downside risks below expectations, pointing out that Chinese policymakers had already increased their support for the monetary policy measures of the economy and that they should continue to bank. The Federal Reserve and the European Central Bank (ECB) have relaxed their approach and relaxed their monetary policy before the end of this year.
He emphasized that the main purpose of the present badysis is to badess the three main obstacles, as well as the main areas of support for monetary policy to the economy, emphasizing the possibility that high debt ratios may hinder central banks' ability to raise interest rates to more normal levels.
The badysis showed that the first major obstacle to the global economy was the increased protectionism of the United States in its trade relations with other countries, as evidenced by the trade war between the two countries, but the protectionist policy also plays a role. a role in attempts to modernize the FTA. (NAFTA) and trade tensions between the United States and Europe.
He also pointed out that the optimism for an agreement in April was based on the idea that the technical aspects of the agreement had been discussed and approved in general by trade experts from both sides, and although US President Trump is working hard to get what will help him in his reelection campaign. However, the long-term strategic rivalry between the United States and China would prevent an agreement on a value deal.
He pointed out that political uncertainty was a hindrance to growth in a number of countries and regions, citing the example of BRICEST and its impact on the European economy. The new British Prime Minister, Boris Johnson, has promised to finish his exit from the European Union on October 31st. Or without them.
QNB's badysis cast doubt on Johnson's ability to do so given the dilemma of a large three-way and somewhat balanced division in the House of Commons, stressing that it would be necessary to hold a general election or a second referendum to get out of the stalemate. Intense trade between the EU and the United Kingdom, which is currently the second largest economy in the European Union.
The badysis also showed that if the UK leaves the EU without an agreement, trade would become slower and more expensive because of the potential for tariffs and tariff barriers, which would directly affect GDP growth and the growth of the EU, each representing an important market for the other. Persistent uncertainty about Britain's exit from the EU has indirectly weakened growth in the UK and in the EU due to weak investment and weak business confidence and consumers.
The third hurdle is the high level of global debt: low interest rates since the 2009 global financial crisis have encouraged many countries and businesses to borrow money. Debt is not a problem if it is used to finance productive investments. A large amount of money borrowed to finance consumption rather than investment (for example, the Italian public debt) or may not have been invested wisely (such as China's ghost towns), and debt service may become constrained or become unsustainable if interest rates have increased significantly.
In its weekly badysis, the National Bank of Qatar (QNB) said that these economic and other difficulties have already led central banks to further support the economy through monetary and fiscal policies, so that the easing of financial conditions support global GDP growth in 2020.
The bank's badysis suggests that the Fed's recent rate cut and lenient approach could threaten its independence by allowing Trump and global markets to paralyze it. Another reduction of 25 points is expected in September or December, The weakness of inflation has forced the ECB to stick to the policy of easing from September, but the restrictions on bond purchases and the impact of negative interest rates on bank profitability make the specifics likely to be complex and remain opaque due to government sensitivity. Of.
High debt ratios and falling interest rates also mean that monetary policy has become less effective in stimulating economic growth. Interest rates have been falling for decades and have remained at very low levels since the 2009 global financial crisis. In fact, the global economy is likely to remain in equilibrium interest rates and interest rates. Low growth rate: Central banks simply can not standardize policy by raising interest rates to higher levels as they fear another global financial crisis.
According to the badysis, excessive risk taking in the global banking system has made the global financial crisis of 2009 extremely critical. Unfortunately, regulatory capital and liquidity controls in banks have improved considerably, and the establishment of prudent policies should The main banks absorb shocks instead of amplifying them. The next crisis should not look like the 2009 financial crisis.
According to QNB badysis, the only way out of this situation of low interest rate and growth equilibrium is that governments combine a combination of stimulus and difficult economic structural reforms from a political point of view. China's monetary stimulus coupled with fiscal stimulus to support the economy.
On the financial side, the government has already cut taxes on value added and social security, as well as special tax breaks for households, while the People's Bank of China will probably use several tools to ease its financial situation in the market. interbank and channel more loans. To the private sector instead of the oversized sector owned by the government.
International institutions such as the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD) also make recommendations on structural reforms: for example, an increase in public investment to modernize or develop dilapidated infrastructure in developing countries. US and Germany will inevitably boost growth, while labor market reforms in Japan and France Increase productivity and employment: Such reforms are politically difficult at best. but they will probably be more so given the constraints outlined in this report.
[ad_2]
Source link
