Categorized | Global Economy

The Global Economy: Predictions for 2014

The beginning of 2014 saw a decline in global stock markets causing some investors to fear a collapse. The Economist reports this is only a “wobble” not a complete downward spiral. The article goes on to say that the global economy is too reliant on the United States’ stock market, which saw a significant halt in financial activity due to a very harsh winter.

Even though the United States’ economy is recovering, it is doing so slowly as investors are still hesitant to invest large amounts of money. The United States is a major player in the global economy because most of the goods its citizens buy are imported. A tourist may very well go to America on holiday only to return with souvenirs stamped “Made in China.” Many Americans are choosing to save their money for fear of another economic downturn, putting off international travel until the economy stabilizes.

In China economic growth is slowing and may very well be headed toward collapse. The Chinese economy is based on manufacturing, but investors use borrowed money to invest, leading to a market based on debt, which will eventually lead to a market collapse. The Chinese government, however still has time to correct the system before a major collapse happens.

Additional Resources 
Goldilocks and the bears (The Economist: login required)
Countervailing motion (The Economist: login required)
Nationalism Could Destroy the Global Economy

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