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The Global Economy is Weakening — 5 Things to Know

1. Just a few months ago, every major economy in the world was growing together. Now, the global economy is weakening with many countries “in stagnation or sliding that way.” Falling oil prices, diminishing factory orders (which signal a lack of demand for goods), and declining profits for multiple large companies are sending global stocks downward.

2. Specifically, Germany and Japan “have both contracted in recent months.” China is slowing more than predicted. Even the United States is expected to slow over the next year (as Trump’s tax cuts are likely to elicit significant public debts). Similarly, in Greece, Spain, and Italy, the unemployment rate has rose above 30 percent. The average worker in Britain has not seen a pay raise in over a decade and South Africa’s economy is shrinking.

3. Many analysts have said that the weakening economy is a result form rising U.S. interest rates and “the unfolding trade war unleashed by the Trump administration.” Many think that Britains exit from the European Union is to blame as well, as European trading has become more difficult.

4. The Organization for Economic Cooperation and Development have announced that while there is no current need to panic, they have declared “the global expansion has peaked.” This means that a “pause or downturn” is soon on the horizon which could effect the “tens of millions of people who have yet to recover from the devastation of the Great Recession.”

5. While the economy seems unlikely to fall back into a financial crises, it has not soared to generate pay raises and significantly better unemployment numbers. And with global trade becoming more challenging, the economy may be headed for trouble. Swati Dhingra, an economist at the London School of Economics, said, “We see a lost generation. There was already wage stagnation and productivity stagnation. The trade war has exacerbated all of that.”

Source: https://www.nytimes.com/2018/12/01/business/global-economy-growth.html

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