Global economy continues to cool

Global economy continues to cool

The world economic climate deteriorated to the lowest level of 2009. According to the survey conducted among 1230 experts from 117 countries by the Munich-based Ifo Institute for Economic Research, the world economic climate has worsened again, with the indicator falling in the fourth quarter from −10.1 to −18.8 points. 

"Both the assessment of the current situation and expectations dropped significantly as the global economy continues to cool," according to the report.

"There was a deterioration of the economic climate in nearly all regions," President of the Ifo Institute for Economic Research Clemens Fuest said. 

According to him, assessments of the current situation were unfavorable particularly in emerging markets, while in advanced economies it was primarily estimates for the coming months that declined. In emerging markets, the downward trend was based mostly in Asia; in advanced economies, it was concentrated in the U.S.

"The experts expect significantly weaker growth in world trade, weaker private consumption, and lower investment activity," he added.

The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, speaking to Vestnik Kavkaza, named the uncertainty in U.S.-China trade relations as the reason for pessimism in global financial markets.

"It seems to me that this is due to the uncertainty in trade relations between the U.S. and China, respectively, the apparent tendencies for an economic slowdown in different countries, which slows down consumer demand, that is why businesses thinks that a recession is approaching," the expert noted.

At the same time, Abramov said that he did not expect the onset of a real economic crisis in the near future.

"I don't see any obvious signs of an imminent recession. There are some optimistic statements about the trade deal. The reports of the companies for the third quarter of last year were quite strong. Statistics show that growth is slowing, but it is far from zero. I hope this is just a temporary decline in sentiment," the economist concluded.