• "The larger the stimulus used by China to offset the trade war impact, the bigger will its deficit likely be," Tao Wang, UBS's chief China economist, said in a report on Tuesday • Markets are also worried about the ongoing Italian debt crisis, and the rising price of oil.
Trouble is brewing in global markets. • China's current account balance is down significantly from last year's 1.3% and will likely turn into a small deficit in 2019. If so that would be the first time in 24 years. • "The larger the stimulus used by China to offset the trade war impact, the bigger will its deficit likely be," UBS's Tao Wang, chief China economist, said in a report on Tuesday. • That may hurt confidence and hasten outflows, putting pressure on the nation's currency.
(3244.81 – 2606.91)/ 2606.91 = ↑24.5% since October 2018
International Monetary Fund (IMF) • The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., consisting of "189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world • Through the fund, and other activities such as the gathering of statistics and analysis, surveillance of its members' economies and the demand for particular policies, the IMF works to improve the economies of its member countries • The organization's objectives as stated in the Articles of Agreement are to promote international monetary co-operation, international trade, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty
IMF Global Outlook • The IMF lowered its outlook for the global economy, saying it will grow 3.7% this year, the same as in 2017 but down from the 3.9% it was forecasting for 2018 in July. • Beijing is coming to terms with a lower rate of growth as the trade war with the US escalates, Barclay's chief China economist, Jian Chang, told CNBC • Tit-for-tat tariffs and reduction in Chinese export growth might trim between 0.5% to 1% off the Chinese economy, she said
Italy is also troublesome • Away from China and the USA, issues in Europe are also partly to blame for market jitters sweeping the globe. After a few months out of the limelight, Italy has sprung back to the forefront of investor concerns.
Trouble in Italy • Last week, Italy submitted its spending plans for the next year to the EU. The budget came as a shock: The country said it planned to spend a whopping 2.4% more than it makes over the next three years. • This target risked breaching EU rules. Investors balked, sending the country's bond risk premium higher, and the euro tumbling. • Italy's longstanding high levels of debt are well-known, but previous governments had all at least paid lip service to the idea that they would reduce that debt. The current populist coalition is barely even doing that, and this is scaring people.
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- Spring '19
- Wall Street Crash of 1929