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Global economy 2024, crisis threats from these countries

2024 will still be a complex and treacherous year for the global economy.
The past 2023 has put the great world powers, as well as developing nations, to the test, leaving traces of uncertainty for the next 12 months.
The hot topics at the beginning of the year, and the risks of instability, are many: inflation and the most aggressive monetary tightening campaign in recent decades, the wars in Europe and the Middle East, the serious real estate crisis in China, the growing rivalry between Washington and Beijing, the challenge of the energy transition, the race for raw materials, companies forced to rethink supply chains, geopolitics as an unknown for global security.
The two ongoing conflicts with very uncertain outcomes and the approximately 40 national elections scheduled around the world are bringing political fragility back into the spotlight, which is also undermining economic growth in 2024.
According to some analysts, however, the year just ended has launched There are also positive signs: the post-pandemic global recovery has managed to move forward.
In the United States, consumers defied expectations and continued to spend.
In China, the booming electric vehicle industry, along with a good dose of fiscal stimulus, has helped leaders stay close to their growth target.
And the world economy's new great hope, India, has picked up some of the slack.
However, there are still threats to global economic stability on the horizon.
2024 can still reserve nasty surprises, while the first days of the year pass with 5 questions without certain answers.
An analysis by Bloomberg has highlighted which countries will be the protagonists this year.
read also Geopolitics scares the world in 2024.
The reasons 1.
How resilient will US power be? The recession did not hit the US in 2023, although several analysts had predicted a slowdown in global power due to the effects of interest rates at record levels.
The question now is whether 2024 will be as rosy, with consumers able to keep their spending levels high.
Recession or soft landing? The answer will largely depend on the resilience of the labor market which has so far resisted the barrage of interest rate increases by the Federal Reserve.
Rising unemployment would hit consumer spending, which in the United States accounts for nearly two-thirds of economic output.
The Fed's latest projections see the unemployment rate rising to 4.1% by the end of the year.
Unemployment claims, published weekly, are a leading indicator of labor market weakness and will therefore be among the most monitored data.
2.
Will China overcome the real estate crisis? The world's second largest power is in the midst of an economic slowdown, triggered in part by President Xi Jinping's crackdown on real estate speculation.
Developers are also burdened with debt.
Nomura Securities Co.
estimates that about 20 million units of real estate where construction has been delayed or has not started have been pre-sold.
Those waiting for their new apartments are becoming increasingly impatient, turning the issue into a potential threat to social stability.
Senior officials have pledged to prevent a cascade of debt defaults by developers, a disaster that would overwhelm the banking sector and potentially condemn China to a lost decade of anemic growth, similar to Japan.
This could be the year for a full-blown bailout.
read also USA-China, the clash could worsen in 2024.
Here's why (there are 3 risks) 3.
Germany sick of Europe? 2023 was a very complex year for Germany, which went from being the locomotive of Europe to becoming a patient of the old continent.
The German nation was the worst performer among major economies last year.
High energy prices and restrictive monetary policy, together with weaker global demand for its exports, have caused a slight contraction in GDP.
There is no shortage of problems in 2024, including the ongoing war in Ukraine, an auto industry facing intense competition from Chinese-made electric vehicles and tighter controls on government spending.
The country's world-leading manufacturing sector faces a costly and politically difficult transition to alternative forms of energy after losing access to cheap gas from Russia.
Rethinking supply chains in response to the U.S.-led effort to contain China adds to the challenges for Germany.
To understand whether the malaise is easing or worsening, the Ifo Institute's corporate expectations index will be crucial.
4.
Japan towards the end of negative rates? The country's decade-long experiment with unorthodox monetary policies (negative interest rates) is nearing its final chapter.
The widening gap between Japanese and U.S.
government bond yields in November helped push the yen to its lowest level since the early 1990s, raising the cost of imported fuel and food and denting purchasing power .
With inflation hovering above the Bank of Japan's 2% target, Governor Kazuo Ueda is expected to abandon the world's last remaining negative interest rate as he moves away from his inherited yield curve control framework by his predecessor.
For a generation, pension funds, insurers, banks and even mom-and-pop investors have plowed their money into overseas assets to earn some interest, making Japan the world's largest creditor nation.
This is why Japanese monetary policy is under special observation in 2024.
If Japanese government bonds start offering better yields, trillions of yen could flow back, causing huge imbalances in global financial markets.
read also Another sign of recession from Germany: greenhouse gas emissions plummet 5.
India, engine of the global economy? As China begins to grow more slowly, economists look to India as a likely leading player on the global economic stage.
Analysts at Goldman Sachs expect increased government spending to be the main driver of growth, with private sector investment taking over in the second half of the year.
However, while India has advanced faster than any other major economy, the unemployment rate rose above 10% in October, the highest in two years, according to the Center for Monitoring Indian Economy.
Furthermore, women's labor participation rate is stuck below 60%.
Economists at HSBC Holdings Plc say that even if economic growth can accelerate to 7.5% annually over the next decade, only about 45 of the 70 million jobs needed to accommodate India's growing population will be created, leaving 25 million jobs behind million of people.

Author: A.W.M.

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