Friday's report on the world economy showed that many countries hit a rough patch as businesses experienced a slump in recent weeks. It was said that in the U.S., hiring slowed, exports in China plummeted and German factories received fewer orders as well.
Now, as most economies around the world already fell short from the target profits and the Organization for Economic Co-operation and Development (OECD) slashed its forecasts, businesses are worried that the slowdown may continue for a while. The economy is bad that people fear recession will soon follow, Bloomberg reported.
"The trends in the global economy have certainly concerned markets,'' Philip Shaw, chief economist at London's Investec said. "It's material enough to make a difference to the policy outlook."
This world economy's situation has also placed China and the U.S. under pressure to end their trade war. The conflict has done enough damage to many countries so businesses have been hoping for the China-US trade talks to succeed so they can get back to normal business.
At any rate, whether the status of the world economy will improve or not, will be dependent on how Presidents Donald Trump and Xi Jinping will handle or settle their trade war. If they can resolve their conflict soon, then businesses will invest and start hiring again which will be a big help in giving the economy a big boost that it needs.
"This is a moment of heightened uncertainty for global growth. A Fed pause, trade truce, and China stimulus are all reasons for optimism," Tom Orlik, chief economist at Bloomberg said. "From U.S. jobs to China exports, the most recent data paint a more pessimistic picture. We continue to expect stabilization in the second quarter. Risks to that call are tilted to the downside."
Meanwhile, as said before, the OECD slashed forecasts once more for the global economy in 2019 and 2020 and it issued warning that the trade war and the improbability of Brexit will greatly affect the trade and world commerce, as per World Economic Forum.
"High policy uncertainty, ongoing trade tensions, and further erosion of business and consumer confidence are all contributing to the slowdown," the OECD stated in the report. "Substantial policy uncertainty remains in Europe, including over Brexit. A disorderly exit would raise the costs for European economies substantially."
Finally, the Brexit and the U.S.- China trade war are both approaching their ends and depending on the results, the world economy can recover soon.
