"Russia Today" TV website published an article titled "Cyclical Downturn: Where does the Risk of a Global Economic Crisis in 2020 come from?" on July 10, saying that the possibility of an economic recession in the United States has reached its peak in the past 10 years. The above conclusion comes from the recession risk indicators issued by the Federal Reserve Bank of New York. The market is worried about the tension in the trade war, which has led to a decline in commodity demand and lower prices of energy raw materials. At the same time, analysts are also worried about the high level of government bonds in many countries and the rising risk of large-scale defaults. So, what consequences will the new global economic crisis lead to?
article said that the assessment of the Federal Reserve Bank of New York shows that the probability of the US economy falling into a recession in the next 12 months is the highest in 10 years. Since 2009, the recession risk indicator has exceeded 32% for the first time. In the past half a century, if the above indicators exceed 28%, experts will find that there is no suspense to the occurrence of an economic recession.
Economists are also uneasy about the inversion of long-term and short-term interest rates in US Treasury bonds. The spread between the 3-month Treasury bond yield and the 10-year Treasury bond yield showed a negative value, with the former being 2.25% and the latter being 2.1%. The general view is that this kind of situation only occurs when the recession enters the countdown. The last time this happened dates back to 2007. The article
believes that to make things worse, the United States has experienced the risk of debt default for the first time in the past 40 years. Research by the bipartisan policy research center shows that the record high of $22.4 trillion (1 USD is about 6.9 yuan) and the sluggish budget revenue growth may cause Washington to be unable to pay all debt bills on time and in September this year.
The global economic situation is fragile
Russian Market A company chief analyst Artem · Jayev pointed out that the current situation of the US economy is in a deep debt quagmire with EU countries such as Italy and Greece . It may lead to the recession of the global economy.
He explained: "Today, the global economy is in the most vulnerable position. The main economic cycle predicts the crisis will arrive at the turn of 2019 to 2020." The article said that most of the chief financial officers (CFOs) of major global companies have also made speculations that a full-scale recession broke out in 2020. The global business outlook report of Duke University in the United States shows that 48.1% of CFOs interviewed by the US companies believe that their economy may decline in the second quarter of next year, and 69% of CFOs believe that the recession will definitely begin before the end of 2020.
In African countries, 85% of CFOs believe that the region's economy will fall into recession in the second quarter of 2020, with the proportion of CFOs in European countries holding this view being 63%, 57% in Asia and 52% in Latin America.
Duke University finance professor and head of the survey John Graham pointed out: "No region in the world has an economy that is stable enough to shoulder the responsibility of the global economic engine. This is the first time in 10 years."
tariff war may be intensifying?
article introduces that professor and famous economist Nuriel Roubini also made a prediction of the global economic recession in 2020. He was the first to predict the global economic crisis in 2008 and the collapse of the cryptocurrency market.
In his opinion, the intensification of the trade war between the United States and China may become one of the main reasons for a new round of economic recession.
At the G20 summit held in June, China and the United States once again agreed to resume trade negotiations. Meanwhile, experts are still worried that the tariff conflict will intensify. As Mark Goykhman, chief analyst at Telix, said, in order to support its own producers, the United States may launch a new round of tariff measures, not only targeting China, but also commodities from the EU, Canada and , Mexico, cannot be spared. He pointed out that the above situation will lead to a global decline in demand for commodities, resources and productivity, and disrupt the growth of the world economy.
article said that experts believe that at a time when the EU economy is in a downturn, Washington's trade restrictions on Brussels may hit the latter deeply. According to the latest data from Deutsche Federal Bank, in May, German industrial orders fell 8.6% year-on-year, setting a new low since November 2009.John Hardy, head of foreign exchange strategy at Saxo Bank, believes that such industrial statistics may indicate that the German economy is gradually sliding towards recession.
Hardi said that as the EU's largest economy, Germany's fall into recession will add new risks to the entire region.
experts speculate on the consequences of the crisis
article introduces that Vladimir Rorankovsky, an expert from the Russian International Financial Center, believes that today it seems that the possibility of a global recession in 2020 is more than 50%, but the crisis from 2008 to 2009 will not repeat itself.
He explained: "This is likely to be a typical cyclical crisis, not a global credit and financial disaster 10 years ago. There is no reason for such a shocking collapse at present. After all, there are not many high-risk products in major financial markets (stocks, bonds and real estate). Therefore, compared with 2007, the current crisis is not imminent."
At the same time, Goyhmann also said that once the trade war becomes more acute, it will be more difficult for countries and large enterprises to repay high debts. Similar situations may trigger a series of debt defaults and have a negative impact on global financial markets.
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