The global economy currently is heading into a recession, affecting many countries around the world. There are several factors behind this recession that are showing signs of severe weakness. And one is an escalation in trade tension between the US and China.
Global growth is likely to slow down further in the next few months, affecting Greece and the rest of the eurozone, according to analysts at Pimco, one of the world’s leading investment funds. In a shared analysis report with Kathimerini, the firm advises investors to be cautious for the time being, until the situation becomes clearer. However, some rates markets are already taking recession-like conditions for granted.
The analysts further noted that the world economy is about to enter a low-growth window of weakness, expecting it to persist into 2020, with heightened uncertainty about whether it will be a window to recovery or recession.
Brexit, Trade War Are Posing Significant Challenges
Brexit, the economic slowdown in the Eurozone and the risk of escalated trade wars can also be identified as major factors that are posing persistent challenges. The Brexit impact will differ considerably across the EU, with some regions bracing for severe costs and others less exposed.
The Pimco report also warns the US GDP growth to slow to a meager 1 percent or so in the first half of 2020, which is significantly down from 3 percent in the first quarter and 2 percent in the second quarter of 2019.
Pimco said that “Ongoing trade tensions will exert a significant drag on eurozone growth, somewhat offset by supportive domestic conditions, including easy financial conditions, some modest fiscal stimulus, and some remaining pent-up demand. Sequentially, growth is expected to improve modestly over the forecast horizon as trade conditions improve gradually through the year, but this remains uncertain.”
According to reports from Eurostat, the European statistical agency, the eurozone countries economy grew by 0.2 percent over the preceding quarter, which is half the 0.4 percent growth rate posted in the first three months of the year. On the other hand, the economy surged 1.1 percent, on an annual basis, from the same quarter a year ago.