The stock market in wartime
World economy now “prone to shocks” according to the IMF
“Shock-prone” is how the International Monetary Fund (IMF) has defined the global economy in no uncertain terms. Indeed, for a few years we have been seeing all sorts of things: from the pandemic that brought the world to its knees, to the stoppages of the distribution chains that triggered the inflationary spiral fought with rate increases, to the war in Ukraine, to the one in Israel and finally with the new entry of the Red Sea. Red Sea which sees the US and UK lined up against the Yemeni Houthi terrorists. In short, a fluid economy sailing in a stormy sea.
READ ALSO: Ex Ilva, Mittal reveals his cards: they want 400 million to leave their 40%
The forecasts for the year 2024 are overall growth but patchy, with the United States and China acting as the locomotives and Europe acting as the last wagon, in extreme weakness. Of course, the Fed and the ECB have not yet completely said the word stop on rates, but all analysts agree that further increases could no longer be tolerated, especially by the economies of highly indebted countries. Another sword of Damocles is represented by the Chinese real estate market bubble ready to explode with great noise.
World economy, wars, humanitarian and economic risk
What is certain is that wars are not only a humanitarian but also an economic risk for the planet. War also means increases in raw materials and disruptions to trade flows. According to the International Monetary Fund, a 10% increase in the price of crude oil reduces global gross domestic product by about 0.2% and increases inflation by between two and four tenths. For now it's just a worry hanging over our heads. In the new current scenario it is worth remembering that 12% of world trade passes through the Red Sea. The terrorist attacks, if not stopped, could force shipping companies to take the route towards the Cape of Good Hope with a considerable increase in navigation days (over 10). Higher costs which would be passed on to the goods and the final consumer. Regarding inflation, many observers agree that it will continue to fall towards the final target of 2%.
Energy prices are falling as are food prices. Although both are not immune to speculative activities that have nothing to do with events. In this rough sea, China always represents a potential tsunami. The Asian giant is still the engine of global growth but it is undeniable that it is slowing down. Furthermore, there are many concerns that arise from its real estate sector, led by the two big Evergrande or Country Garden. Without forgetting the first collapse of a Chinese bank, unimaginable just a couple of years ago, that of the Zhongzhi bank with a hole of 33 billion euros. What is certain is that the growth rate of the Chinese economy is at 5% and no longer in double digits and this could represent another risk for the years to come. And then, to make sure nothing is missing, 2024 will have a record number of elections. Another element of possible risks.
#World #economy #wars #inflation #China #rollercoaster #year
