The 7 Major Economies (I)
Written by Alfonso Elizondo
United States.- The world's leading analysts believe that the trade war with China is driving the country into a severe recession. Last week Trump postponed the increase in tariffs on Chinese goods until December 15. The clash between Washington and Beijing is now having impacts that go beyond the two countries, and it is believed that this may lead to a global recession.
China.- Its economy continues to record a high growth rate of 6%, although it is the lowest in the last 17 years.
This decline is a result of Jinping's efforts to grow the country in higher-level sectors such as services and high tech. But he is also seeking to reduce the returns derived from his state capitalism, and some analysts see this as a sign of exhaustion.
The Chinese economy has now reached the levels of the 90s because in recent years it has increased its control over the private economy and most new loans have been extended to public companies. In July, industrial production fell to its lowest level in the last 17 years due in large part to the tariffs imposed by Trump.
United Kingdom.- During the second quarter of 2019 its economy contracted by 0.2%. Analysts attribute these difficulties to doubts related to the process of their leaving the European Union, known as Brexit, that had been planned for March 29 of this year.
Prime Minister Boris Johnson’s promise to deliver Brexit on October 31 - with or without an agreement with the European Union - and the attempts of the British Parliament to avoid a no-deal Brexit have created greater uncertainty. Since the time of the June 2016 referendum when it was decided to leave the European Union, the pound sterling has fallen from US$1.46 to 1.21.
Germany.- The German economy declined by 0.1% during the second quarter of this year. The downturn started with exports of machinery, trucks and cars which experienced a sharp decline in sales to China.
In the last year Germany's imports fell 8%. So some analysts predict that Germany is heading for an imminent recession, although they have a fiscal surplus of 7.4% of GDP to stimulate the economy.
Addendum: In a second part of this article I will discuss the remaining four largest economies, including Singapore.