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Downward Future
David Malpass, the man in charge of one of the most important international financial institutions, the World Bank, has stated the global economy will decelerate much faster than previously believed. This is in part due to the piling negative-yielding debt indicating growth will be significantly slower in the coming years.
“The slowdown in global growth is broad based,” Malpass said on Tuesday in a speech in Washington. Recent developments indicate that growth in 2019 will most likely fall short of the expected 2.6% in real terms, Malpass said. Nominal growth rate appears to be ready to slow to less than 3 percent - “a big letdown” from the much higher 6 per cent high of 2017 and 2018.
Roughly $15 billion in bonds of negative yields display investors’ acceptance and expectation of low to negative growth in the foreseeable years. This could last up to decades.
Malpass noted China’s slowdown to be a significant contributor to the global slowdown, in addition to “substantial” downturns in Argentina, Mexico and India, plus very poor growth in developing countries.
Parts of Europe are in low growth and even recession, with Germany and UK seeing a downward quarter.
It has now come to Central Banks across the world on how to respond to the doom that lies ahead.
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