Business Today

Future Uncertain

World economy is still precariously poised, thanks to the tariff war.
twitter-logo Rajeev Dubey   New Delhi     Print Edition: October 7, 2018
Future Uncertain

Exactly 10 years since the collapse of Lehman Brothers, the recent recovery in the US and world economy is equally overshadowed by the growing unease over what the future holds in store. By all accounts, the world economy is nearly as precariously poised - if not more - as it was right after the Lehman collapse.

The biggest fear revolves around the ultimate outcome when the ongoing tariff war between the US and China reaches its logical conclusion. Rising tariff barriers have truly enveloped the world economy as countries have imposed retaliatory tariffs, including Europe and several US allies. If this continues for long, it has the potential to slow down and practically disable global supply chains and world trade. Nobody knows for sure where this is headed.

The second big fear is regarding crude oil prices. After being consistently above $70/barrel, it could stoke inflation in all crude-dependent economies. High inflation will force hiking interest rates which will lead to slower growth of the economy.

Also, global economists are pointing out that world economies are together more indebted today than ever before. In fact, total debt at $237 trillion is $70 trillion more than just before the Lehman collapse. That is to ask whether the economic recovery has been fully debt funded. If yes, to what end!

@rajeevdubey

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