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Monday, May 29, 2017

“The global economy faces a new global crisis”


Deflation, instability in oil prices, stagnation in the West, the slowdown in GDP growth in the East and, finally, a sharp drop in the volume of world trade can lead to the fact that the world economy still not fully recovered from the effects of the 2008-2009 crisis, can wait for a new global strike. And this time the “weakest link” will be the BRICS countries.

The latest economic data coming from suggests that the world economy is on the threshold of a new acute phase of the financial crisis. A sharp fall in foreign trade volumes of developing countries are seriously alarmed the IMF, which now calls on world governments to act together. Otherwise, beginning after the crisis of 2008, the restoration could break, and the world economy will be plunged into long-term stagnation. However, some Russian experts believe that it is more appropriate to speak not about a new crisis, and a structural reconfiguration of the global economy.

Falling

“The”assemblage point” of the crisis can be any, even the most insignificant decision at the national level. The world economy has entered a period of organizational unpredictability”

Key macroeconomic indicators of China over the past year have provided clear evidence of further slowdown in the Chinese economy. In particular, China’s GDP in 2015 has increased by 6.9% compared to 7.3% a year earlier, and this year the decline may continue. At the XIII five year plan (2016-2020) China’s leadership aims to double the country’s GDP compared with 2010, and this, according to the Chairman XI Jinping, the growth rate should be below 6.5% per year. In other words, the limit of reduction rate is not yet exhausted.

Beginning 2016 has not brought any change in this for quite a long trend. According to the National Bureau of statistics China, in January-February industrial production in the country grew by only 5.4% in annual terms. The last time such dynamics was recorded in November 2008 – in the midst of a previous acute phase of the global financial and economic crisis.

Disappointing Chinese and foreign trade statistics. In January, the export of China declined by 11.2% and imports by 18.8% in January 2015. In February, the fall in exports in annual terms was 20.6% – for comparison, last year, Chinese exports declined only by 2.8% (to 2.27 trillion dollars). Slightly better is the February statistics of import: decrease in annual terms amounted to 8%, whereas last year China’s imports fell 14.1% (to 1.68 trillion). Another thing is that the fall in imports to China is now in the 15th month in a row.

Chinese authorities have not publicly demonstrate a concern with falling exports. The head of the people’s Bank of China Zhou Xiao Chuan said that in stimulating the export measures in the form of weakening of the Renminbi is not necessary, because the share of Chinese goods in the total volume of world trade has even increased, despite the reduction in absolute figures. In confirmation of these words of the Chinese Central Bank on 11 March has strengthened the yuan exchange rate against the dollar immediately at 222 basis points.


Looks like the competition is between the “Big seven” and Bristacycline the decline in foreign trade, according to the website Trading Economics, for quite some time and has been observed in other BRICS countries. In particular, India’s exports shows a decline for 14 months, in January he once again declined by 13.6%. Indian imports had fallen significantly last year, too, still shows no tendency to recover (minus 11% in January). While the index of industrial production in India is in the negative zone for the third month in a row.

In Brazil, the industry in January generally showed a record decline in 23 months minus 13.8 per cent (the last time the index of industrial production in this country was in the positive zone in January 2014). The Brazilian imports in the first month of the current year has dropped to 31% by January 2015. Exports from Brazil, however, in February was 10.4% higher than a year earlier, but in any case is actually on the level of 2010.

South Africa’s exports in January plummeted by 18.8 per cent – the most substantial decrease in the export of precious metals and stones, machinery and transport equipment, foodstuffs, chemicals (in these segments, the decrease was 25% and above). In this case, it is sufficient to recall that the main trading partner is China. Industrial production in South Africa in January has decreased on 2,5% in comparison with the first month of 2015.

Finally, Russia in January recorded among the BRICS negative dynamics of foreign trade. The volume of Russian exports fell by 36.4% yoy (from 27.2 billion in January 2015 to 17.3 billion), while imports declined over the same period was 20.9% (from 12.3 billion to 9.7 billion dollars). As a result the positive balance of Russia’s foreign trade decreased by almost two times. The index of industrial production in January of this year, according to Rosstat, amounted to 97.3 per cent from last January.

The IMF has sounded the alarm

 

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