The World Bank predicted a new global crisis

In its report Global Economic Prospects , the World Bank predicts that a new financial crisis is approaching. According to and.about. bank chief economist Shantayanan Devarajan, for the past half century, global recessions have occurred once a decade, and exactly ten years have passed since the last recession in 2009.

Details

• Forecasts of global economic growth for the next two years look good, world GDP in 2018-2019 will grow by 3%, economists of the World Bank write in their report. But forecasts looked optimistic even before the start of the previous recession in 2008-2009, they emphasize. The bank's models show that the probability of the economic situation worsening is higher than the possibility of its improvement.
• If earlier the WB expected a slowdown in global GDP growth, now economists are talking about a sharp slowdown. In particular, it can be provoked by trade wars caused by protectionist policies (for example, between the United States and China), a default on debt obligations in one of the large emerging markets, as well as a sharp tightening of monetary policy in the United States, followed by an increase in interest rates.
• The report notes higher levels of debt compared to before the 2008 crisis - so most countries in the world are vulnerable to sharp changes in US monetary policy. The risk of default can only increase due to the tightening of monetary policy, the outflow of capital from developing countries towards developed ones and a sharp depreciation of currencies.
• Risks are also posed by geopolitical factors - the tense situation on the Korean Peninsula, the Middle East and in Russia's relations with the United States and Europe, as well as political changes - the growing influence of populism, anti-globalization sentiments and "polarization of public opinion".

Context

• warned of a possible new crisis Recently, Nobel laureate in economics Paul Krugman . on his Twitter The economist wrote that the current situation in the economy is reminiscent of the situation before the Asian crisis of 1997-1998, during which the stock indices of developing countries collapsed by 59%, and key rates were raised to exceptionally high levels.
• Billionaire George Soros is also warning about the coming financial crisis . The main reasons for the future crisis Soros called the failure of the Iranian nuclear deal and the "destruction" of the transatlantic alliance between the EU and the United States. Both of these events will necessarily lead to a negative effect on the European economy and other problems, including the devaluation of the currencies of developing countries. Soros also referred to “territorial disintegration” as a negative phenomenon - the exit of Great Britain from the EU.

What's in it for me

For Russia, a possible crisis does not promise anything good. An external shock will only add negative effects to the economic situation in the country.

Liana Faizova