To talk about fears of an imminent economic collapse over the past years did not come from a vacuum, and indicators did not indicate to another thing , the global economy is in a state of difficult throes which is the worst since the global financial crisis in 2008, that suspended the acceleration of growth and threatened the world for a terrifying economic collapse much like the devastating tsunami that no country in the world will be in safe .
the global economy over the few past years has been exposed to the huge pressures and imbalances that confused its course and weakened its growth, which made the experts to say the possibility of a major economic collapse that its consequences will hit all economic sectors, especially the international trade and oil prices low, and the slowing Chinese economy and the decline in growth to its lowest level since the beginning of the twenty one century.
this confusing situation has made the international Monetary Fund to call a warning to the necessity of the concerted efforts and overcome the misguided policies that led the economy into this critical situation.
Here , Deputy IMF Managing Director , David Lipton says : there is the “” increasingly dangerous opinion is that policy – makers around the world have exhausted the options of economy support or have lost the will to do so, and he felt to face it, it is required from the leaders to increase their efforts , including the financial and monetary stimulus, and the application of the necessary structural reforms to support growth.
Lipton said in conference held by the national Association for Business Economies that the financial policy for the government spending and tax cuts “must occupy the most important place in the policies.”
Ben Hackett ,representative of the international group of ICF and the Organization HACKET said that the world economy after the global crisis in 2008 was experiencing a slow growth, which is now in trouble, and the recovery in Western Europe is weak, as well as declining of growth in the Chinese economy and therefore we wait a recession to be takenplace.
David Lipton said that the advanced economies that have a room for the financial maneuver, and stressed that ” the risks are clearly higher than the previous, and a joint action has become more powerful and more necessary. ”
here , we refer to our article , earlier about the emerging markets , and we agree with Lipton that emerging markets face significant challenges , especially after the departure of huge capital estimated by the international Institute of finance to 8.9 billion euro , while emerging bond markets attracted at $ 5.3 billion.
as it is well known, any an attempt to raise the interest rates from the US Federal during this year, will increase the suffering of the emerging economies and will lead to the escape of investments and capital from these countries.
the biggest fear of the Fund ‘s experts is not only low commodity prices and volatility in global stock markets, but they see the fear is that the policy makers perhaps have exhausted their options or perhaps lost their will.
Lipton assured , “for the global economy , it has become obligatory for the developed and developing countries to dispel this dangerous idea through to revive the spirit of bold work and cooperation that characterized the first years of the recovery efforts , ” and warned countries from the trade protection and resort to weaken the currency to strengthen growth , saying that these methods “will make the countries weaker in the long run.”
the international Monetary Fund assured that there is a decline in the growth of the global economy, amid of expectations that it will achieve a growth with a rate of 3.4 per cent over the current 2016 , as well as a growth of 3.6 per percent in 2017
and the Group of twenty has sounded the alarm from the slowdown in the global economy and their finance ministers warned of the risks faced by growth “and the trauma that can be caused by a possible exit of Britain from the European Union.”
In these harsh economic conditions, the cooperation among the giant economies is inevitable and to draw more balanced and flexible economic policy, and it is essential to the adoption of structural reforms to boost growth, and policymakers have to maintain the monetary policy and the use of fiscal policy, in order to attract investment and encourage the return of displaced investment from emerging markets, and that everyone to contribute to exceed this sharp curve in the path of the international economy and address the economic crises and imbalances in global markets to avoid the specter of the global financial collapse .
Rawabet Center for Research and Strategic Studies