Chinese and European slowdown may cause global recession

According to new figures from the International Monetary Fund (IMF), the European Central Bank (ECB), and the Chinese government, Europe and China are continuing to struggle following a poor year of growth in 2018. ECB President Mario Draghi said on January 24 that downside economic risks could pose a threat on the economy of the euro-zone, citing geopolitical uncertainties, the U.S.-China trade war, and the volatility in the global financial market as major contributing factors.

Earlier this month, a market strategist Russel Napier wrote in a column that the demise of the euro could trigger the collapse of the global monetary system, resulting in a full-blown global recession. Napier said: The key consequence of this collapse will be the destruction of the euro. The expected success of the far-right and far-left in the European parliamentary election in May this year augurs the beginning of the end for the currency union. Both extremes share a commitment to the return of sovereignty to their parliaments that is incompatible with a single currency.

In an official speech, ECB President Mario Draghi acknowledged the decline in the momentum of the euro and the euro-zone economy on Thursday, stating that the central bank will have to establish new inflation and economic forecasts by the end of the first quarter of 2019. Draghi emphasized that a wide range of instruments such as bonds, interest rates, and long-term loans could be utilized to stimulate the euro-zone economy. But, analysts remain unconvinced whether it would be sufficient to lead to the euro-zone to a full recovery by the year’s end.

Why China’s Economic Slowdown Could Trigger a Full-Blown Global Recession, CCN, Jan 25