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Eight Surprises that hits the World Economy
Citigroup warned all countries around the world, including Indonesia, to begin to be aware of the emergence of the expected eight surprise hit the global economy.
Eighth surprise is that economic conditions related to one another. A total of seven shock is a condition that is closely interlinked with the other, while one other surprises will certainly worsen the situation which previously had been severe.
Here are eight surprises that will shake the global economy according to Citigroup analysts, Gullermo Felices, as quoted from page VIVAnews.com Business Insider.
1. Jump in food prices in developing countries.
This economic shock will begin from countries like China and India, the price of food continues to climb higher. The price increase was due to various factors such as food production is lower than expected due to climate change and increased demand as the impact of the strengthening economy of developing countries.
2. The high interest rates and tight liquidity in developing countries.
A number of developing country governments to respond to rising food inflation due to the tightening of economic policy.
For example, China continues to increase foreign reserves and higher interest rates. India, South Korea, and Brazil also continued interest rate hikes. Although the conduct policy, no one can guarantee that the choice of these countries will succeed.
Prices of food and other commodities such as fuel oil is often not affected by monetary policy.
3. The political crisis in the Middle East.
The increase in food prices is one factor causing demonstrations in the Middle East countries. The condition worsened with the leaking of some confidential documents on WikiLeaks and protests by a protester set himself on fire in Tunisia in the middle of the economic fundamentals are in difficulty.
4. Ballooning oil prices.
Unstable political conditions in the Middle East have pushed crude oil prices rise. The increase was caused world markets such as China and India, which had previously been the monetary tightening in anticipation of the increase, and developed countries like Europe and the United States affected.
5. Rising interest rates in developed countries.
Developed countries are now beginning to think to raise interest rates as a step in anticipation of increased oil and food prices. This step will certainly end the policy of the ease of liquidity that has been running since the financial crisis.
European Central Bank (the ECB) will likely raise interest rates at a meeting beginning next April. Bank of England will also make a similar move in response to a spike in inflation.
6. The end of quantitative easing policy in the U.S..
Quantitative easing vol 2 is a program of the U.S. government to buy the bonds and will expire in June. The impact of the end of this program is U.S. monetary policy to be more stringent.
The U.S. government is not going to raise interest rates. However, the end of this policy is clearly marked the end of a more loose liquidity policy that had been enough to affect the market grow taller.
7. Cutting fiscal and external debt crises.
At a more loose liquidity policy will end, a number of countries in the Atlantic also plans to cut fiscal spending due to fears of foreign debt.
Withholding tax is clearly visible in some countries in Europe, with countries such as Greece and Ireland have asked the International Monetary Fund (International Monetary Fund / IMF) and the European Union to consolidate its finances. However, European countries also witnessed the efforts of the Spanish government threatened the same problem.
On the other side of the country, parliament United States now is struggling to cut budgets that affect the reduction in fiscal stimulus.
All this incident shows is the lack of impact of government efforts to boost the economy and not a single country whose economy is completely recovered.
8. Among the various economic shocks that will hit the global economy, natural disasters in Japan is the biggest worry for the world economy.
In addition to the many deaths and damage suffered by Japan due to earthquakes, tsunamis, and the explosion of a nuclear reactor. Japan's biggest threat for the world economy is the issue of reduced production and supply of goods from Japan.
Japan is also likely going to need an additional supply more oil as an effort to meet the energy needs due to the ongoing improvement of nuclear power plant (NPP). These conditions add to the weight problem of rising world crude oil prices.
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