The Organization for Economic Cooperation and Development (OECD) has warned the world forcefully against the dangers of new heavy turbulence in financial markets. “The risks of instability in the financial markets are considerable,” write Chief Economist Catherine Mann and colleagues in the current economic forecast of the organization. “Worldwide have increased uncertainty and volatility in the financial markets”. The experts even fear that severe turmoil in financial markets could further exacerbate the existing geopolitical tensions.
investors worldwide would the growth prospects of the world economy estimate progressively worse, write the authors of the forecast. As a result, plummeting prices, strong market volatility and nervous investors who panicked deduct money from companies and economies.
Emerging markets are the experts as particularly vulnerable. “The state of the financial systems in many emerging markets has deteriorated in the last 18 months and they have fallen in recent weeks under renewed pressure,” the authors write.
Responsible for this are not only frightened short-term investors, who in recent months many billions from the affected economies have withdrawn, but also the low world market prices for oil, gas and other raw materials that the economy can break into many exporters and tear gaping holes in public finances.
At the same time, the debt of businesses and households in many of the affected countries continue to rise sharply, although they have already reached historically high levels – particularly in China.
Economists warn other large emerging economies such as Brazil, Russia and Turkey against currency shocks. These countries are particularly high foreign debt. Your economies threatened “serious financial and economic consequences” if the currencies more came under pressure.
confidence in the financial system fades
a foretaste of these developments there have been in recent months, in which exchanges rustled in the depth worldwide. Since the beginning of the major stock markets in the world have lost nine percent of its value.
European banks and other companies in the financial sector was hit particularly hard; they have since the beginning of the year lost more than a fifth of its value. Apparently also make investors increasingly worried about the constitution of large parts of the financial system.
The economic experts of OECD should tarnish with their forecast, the mood in the financial markets continues , Economists have revised their growth forecast for the world economy down – even considerably for some economies. “The most recent data from the business were disappointing and the signs point to slower growth in the major economies towards” chief economist said Mann. “Not change and the low oil prices and low interest rates nothing.” The OECD is a forum mainly wealthy industrialized countries.
expected growth rate well below average
Man and her colleagues that the global economy will take 3.3 percent rise this year by only three percent and thus develop as disappointing as last year. “This growth rate is the lowest of the past five years, and is well below the long-term average,” write the economists.
The world economy is growing far more slowly than would be expectable; after all, most of the wealthy economies still find in a period of recovery and the emerging markets are growing capable of much faster.
Particularly pessimistic are economists facing Germany: The local economy they dare to only an increase of 1.3 percent this year. Even three months ago the experts were outgoing from the fact that economic output would grow by 1.8 percent.
The German companies can not escape the global economic weakness. You should especially suffer because the demand from the ailing emerging and oil-exporting economies subsides.
turmoil in the markets
In fact, the economic outlook for the entire euro zone have in recent weeks darkens. The OECD has reduced its forecast for economic development this year by 0.4 percentage points and now expects only a growth of 1.4 percent this year. For the crisis countries that are still struggling with high unemployment, especially among young people, is bad news.
Most recently the US Federal Reserve to unrest the markets worried: the central bankers have also become increasingly concerned about global risks for the US economy. This is evidenced by published Wednesday log notes on the deliberations of the Fed-peak in January.
Given the bleak economic picture calls on the OECD its Member States for stronger action on: “A stronger common political action is urgently needed,” economist urges man. Monetary policy alone is no longer able to push global growth. is necessary, that in addition to the efforts of central banks and governments must do their part to promote growth through additional expenditure. “Many countries have the financial freedom to expand government spending to boost demand,” the report’s authors write.
The governments of many countries could in the long term borrow money at the moment for very low interest rates and should use this opportunity, for example, to invest in infrastructure and so the economy boost. Such investment would also improve the long-term growth prospects of their economies. Necessary also are structural reforms to strengthen the long-term growth drivers.
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