The world economy is not looking very good at
the moment. Germany and France are preparing for a no-deal Brexit, the US
government budget deficit reaches its 6 year high, and the development in the
emerging markets has been affected by the increasing world trade tension. There
is a wide divergence between the US financial market and the financial markets
of the rest of the world, the US stock market is experiencing its longest bull
time in its history. In addition, the world is entering an era of aging
population.
The US government budget deficit reaches its 6
year high because the current Trump administration cuts the tax and increases the
government expenditures for subsidizing the farmers hit by its own foreign
policy, thus more government money is spent and lower tax incomes are received.
Meanwhile, because of the Trump administration’s foreign policy, especially its
trade policy, the cooperation across countries, especially between the US and
the rest of the world, has been weakened. This will hurt the entire global
trading system as a whole. The US government deficit is also alarming, as the
high government deficit means the government at some point needs to increase
its taxes and reduce its expenditures, which will slow down the economic growth
and reduce the market incentives. Furthermore, the no-deal Brexit means the
European political and economic structures for the past several decades will
change eventually, as Britain has been playing a major role in Europe in terms
of politics as well as economics.
Overall, the world economy is alarming according
to so many warning signals.
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