5 Reasons Why The Global Economy Has Continued To Slow Down

The global economy has continued to slow down with concerns that major economies would soon head into recession if proper channels to salvage the situation will not be put in place.

Globally, companies are laying off employees, cutting down on expansion with some shutting down completely as it happened with Thomas Cook, a 178-year-old company in Britain.

According to the World Bank, the global economy has continued to slow down, with 2019 growth expected at 2.6 percent, a 0.4 percentage point decline from 3.0 percent recorded in 2018.

Read: Thomas Cook Collapses After 178 Years Of Existence

The reasons for the global economic slowdown are:

An escalation in the trade dispute between the US and China. The trade dispute is not only affecting the two countries but other countries around the world. For instance, the US had threatened countries that were using Huawei products, a Chinese tech giant.

Country-specific uncertainty such as Britain’s exit from the European Union (“Brexit”). The British are still unsure as to whether they should leave the EU.

Heightened geopolitical tension between the US and Iran, disrupting the mid-stream and down-stream oil supply channel. There are concerns that a war between the new nations might break out soon. This will have an impact to the whole world economically.

Overall slowing global trade, which, according to the World Bank, contracted by 1.4 percent in June 2019. This has been contributed, among other things by policies in various countries.

Reduced consumption expenditure in major global economic regions such as Asia, as it has resulted in the reduction in global demand for goods and services, and hence contributed to the slowing global trade.

The Saudi Arabia Question

There are concerns about the ongoing attacks on oil refineries in Saudi Arabia led by Yemen’s Houthi rebels and the impact the attacks are having on the global economy in terms of fuel prices.

During the first attack, 5.7 million barrels (5 percent of the global oil supply) were wiped out leading to the prices surging by more than 19 percent in less than a day after the attack.

Read: Global Fuel Prices Surge Following An Attack on Saudi Arabia

Get more on the global economy from the Weekly Cytonn Report