The Handbook For Pessimists: In 2024, The World Economy Will Deteriorate
The economy is about to enter its lowest phase in many years.
As the world’s most powerful nations convened in Davos for the World Economic Forum, the world is grappling with an unparalleled array of issues, including war, climate change, and economic downturn. 2024 is not an exception. The economy is about to enter its lowest phase in many years.
2024 got off to the best possible start following years of epidemics, conflict, and skyrocketing inflation. Central banks have lowered interest rates to facilitate global population growth.
Nonetheless, several crises are plaguing the world economy, which has remained unstable.
A powder keg is what the Orient is standing on.
For the entire area, the war in Israel was the catalyst for a chain of tragic events. As radicalized Arab militants did their utmost to defend Palestine, the battle grew more extensive.
Since the US and Britain began airstrikes in Yemen in response to Houthi militant attacks on cargo ships that were transiting the area, tensions in the Red Sea have increased.
Due to commerce being diverted from traditional routes, the prolonged conflict has stifled international transport flows, which has raised the price of commodities against onerous delivery periods.
Although a direct conflict between Iran and Israel is improbable, a fifth of the world’s crude oil supply and crucial trade routes might be in jeopardy if this dire scenario came to pass.
The price of crude oil might rise above $150 per barrel, which would add 1.2 percentage points to global inflation and reduce the GDP by almost 1% worldwide.
The US Federal Reserve System’s policies are driving the country’s most significant economy toward a disaster.
Inflation is still high, even though the US Federal Reserve (FED) has promised to decrease rates three times this year and has maintained the monetary policy rate at its highest level in the previous 22 years.
Interest rate reductions will end if the FED is unable to raise inflation to 2% of GDP. Under this scenario, the US economy will enter a recession, and its markets may lose investor appeal.
For a little while, Europe has conquered the energy crisis.
Within the European Union, natural gas reserves are almost fully utilized, with about 83% of them already filled. The threat still exists even though Europe was able to find alternative sources and win the energy battle with Russia for the time being.
To make it easier to transport natural gas across the continent, the EU is already investing in costly new infrastructure projects. Europeans are facing a recession after Germany, the backbone of the EU economy, contracted the flu.
Due to low industrial demand and high energy prices, the German economy shrank at the end of 2023, after 20 years of stability.
As it recovers, China continues to flood the global market with its goods.
After a sluggish post-pandemic recovery and the massive budget deficit caused by the collapse of the real estate sector, the second-largest economy in the world is expected to grow as we go toward 2024.
Beijing officials are predicting 4.5 percent economic growth, which is less than last year and significantly less than the level seen before the pandemic. However, this is hardly catastrophic for the Chinese economic model.
Production growth is what the authorities are banking on to offset the budget deficit. While certain Chinese products have outsold well-known names, this is hardly good news for the economy overall. The flood of Chinese goods is suffocating the markets that they enter.
Europe has taken precautions to guard against the massive excess of commodities that the Asian nation is sending for export.
Supporting Ukraine increases the supporting nations’ debt.
Western commentators caution that Ukraine runs the prospect of a complete loss following the failure of its counteroffensive, particularly if US military assistance is discontinued, which would give Russia a clear tactical advantage.
Ukraine was able to defend itself thanks to equipment and billions of euros from the US and its allies. But the pressure this aid puts on partner nations only serves to erode their economies and, unspokenly, raise the overall amount of public debt.
Despite the extraordinary economic penalties that the US and its allies have placed on Russia, it seems that the country has managed to get beyond the blockade.
To grow its defense sector, the Kremlin imported parts from Western markets, even though theoretically it shouldn’t be able to. All attempts to financially restrain the so-called “largest economy in Europe” have thus far been fruitless.
The West is supporting Ukraine in the hopes of receiving reimbursement for its assistance when the nation is eventually rebuilt, but things do not appear promising. The war has a terrible effect on the economies of the states immediately engaged in the conflict, and the longer it drags on, the more likely it is that a regional economic crisis will turn into a worldwide one.
Thanks for reading!
☕If you like my content, you can buy me a coffee here.☕
Subscribe to get an email whenever I publish!
https://stefanalbescu.gumroad.com/subscribe
If you liked it, read the following:
Maybe you also need the following, try them:
Try Audible Premium Plus, click here.
Audible Gift Memberships, click here.
Shop deals & SNAP — Eligible groceries, click here.
Try Amazon Fresh, click here.
Create Amazon Business Account, click here.
Create an Amazon Wedding Registry, click here.
Shop Amazon — Create an Amazon Baby Registry, click here.
Join Amazon Prime — Watch Thousands of Movies & TV, click here.
