The world is moving towards the risk of a global recession in 2020, which will be much harder to tame. Comment.

The world is faced with many risks which have the potential to give way to a full-fledged global recession in near future in the year 2020. Most of these factors involve US. The trade wars of US most notably with China and also many other nations which have come clubbed with restrictions on migration, foreign direct investment and even transfer of technologies across. All these are bound to have devastating impact on the global supply chains giving way to the possibility of stagflation. The nation most at risk being US as there are additional risks of new forms of debt which mainly involve the ones from the emerging markets where the borrowing is primarily dominated by foreign currencies. Even the ability of the Central Banks to act as lenders of the last resort is strained which means that the liquidity squeeze in the financial markets have made them more vulnerable to �flash crashes�. Besides US, even Chinese economy has become more fragile. Also one cannot brush aside the supply-side risk driven by trade wars and other hikes in oil prices. Thus, growing volatility may spur companies to reduce the capital expenditure and investment. The conditions are ripe and any major shock can lead to a global recession.

Published: June 18, 2019 | Modified:December 1, 2019

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