Fully eight years after the global financial crisis, the world is still wrestling with an unpleasant realization. Significant weakness continues to plague the global economy and matters may not improve anytime soon. That’s because policymakers have already been doing just about everything they can to stimulate growth. There’s not much more left to try.
A sharp slowing in Chinese growth threatens to collapse a pillar of global growth. As reported by the New York Times, declining demand for raw materials there has impacted producers of oil and other natural resources around the world. Energy exporter Russia is in recession and the ruble has plunged. In Japan, the yield on ten-year bonds briefly turned negative, indicating that investors are actually willing to pay the government for the privilege of lending to it.
That’s how scared people have become to deploy their money in anything risky. Money is also flowing out of emerging markets like Brazil, South Africa and Turkey. Investors pulled about seven hundred and thirty five billion dollars out of such countries last year, the first year of net outflows since 1988 according to the Institute of International Finance.
