Although the global economy is projected to remain strong in 2018, a new report by Economist Intelligence Unit (EIU) estimates high levels of risks that either come from smaller regional hotspots, or are global in nature.
“With favourable economic picture appears to come from a completely different world to the one where headlines are dominated by protectionist rhetoric, major territorial disputes, terrorism, surging cyber-crime and even the threat of nuclear war,” says EIU.
In its recent report titled Top Ten Risks to the Global Economy, EIU says the global economy has seen periods of high risk before, with threats emanating from the regional and the national level, as well as from state and non-state actors.
“Higher commodity prices will prove a fillip for emerging-market exporters, while a gradual tightening of monetary conditions will not take hold to the extent that it slows growth,” says EIU.
“The global economy is moving into a new phase, where more and more central banks will begin to wind down or reverse their loose monetary policy positions in response to vigorous growth rates, giving rise to significant uncertainty.”
The London-based firm has mentioned risks as prolonged fall in major stock markets which destabilises the global economy, global trade slumps as US steps up protectionist policies, territorial disputes in the South China Sea lead to an outbreak of hostilities.
It has also been revealed by the report that global stock markets entered a period of pronounced volatility in early February after a long bull market, raising some concern that it could be the start of a more pronounced downturn.
Others are major cyber-attack which cripples corporate and government activities while China will suffer a disorderly and prolonged economic downturn and major military confrontation on the Korean Peninsula.
The firm also is projecting proxy conflicts in the Middle East escalate into direct confrontations that cripple global energy markets while oil prices fall significantly after the OPEC deal to curb production breaks down as well as multiple countries withdraw from the euro zone.