5 global economies threatened by recession • The Observatory

Five of the largest economies in the world are now facing the risk of an economic crisis that may not require much.

The British economy contracted in the second quarter and growth stagnated in Italy, while data released on Wednesday showed that the German economy, the fourth largest in the world, was the largest economy in the world. contracted during the three months preceding June.

Mexico has escaped an economic recession, which is generally two consecutive quarters of deflation, and its economy is expected to remain weak this year, while data suggests that Brazil experienced a recession in the second quarter.

Germany, Britain, Italy, Brazil and Mexico are among the top 20 economies in the world. Singapore and Hong Kong, both smaller but of global commercial importance, also suffer.

Although economic growth has declined in each country due to a combination of determinants, the global industrial recession and the marked decline in activity have worsened the situation.

The Chinese economy is facing the slowest growth for nearly three decades, the country experiencing a long-term trade war with the United States, which plans to impose new taxes on Chinese exports in September and December.

Last month, the International Monetary Fund reduced its global economic growth forecast to 3.2 percent this year, the smallest increase since 2009, while reducing its forecast for 2020 to 3.5 percent.

These indices are causing increasing concern among investors as the bond market is not strong, with more than a third of asset managers surveyed by Bank of America predicting a global recession over the next 12 years. next few months.

Neil Schering, chief economist at Capital Economics, said he saw no clear rationale for the dark recession: corporate spending on assets, such as equipment, has stabilized around the world and the labor market is flexible, he said.

However, Mr Schering also pointed to some of the major risks that have affected the economy recently: first, the trade war between Beijing and Washington indicates that if Beijing and Washington continue to exacerbate tensions, this could affect business confidence . The International Monetary Fund warned that growth in 2020 would be cut in half if the conflict intensified.

Another major risk is that central banks do not act, causing a negative reaction from financial markets that feed on the real economy. The US Federal Reserve lowered interest rates last month for the first time in eleven years, as China begins to press for less and less to cut its key rate for the first time in four years. Other central banks, from India to Thailand, have also reduced their interest rates and further reductions are expected.