Global economic MELTDOWN: World Bank warns US, China & EU may PLUNGE world into 2008 CRASH

Thursday, June 7, 2018
By Paul Martin

WORLD BANK officials have issued a stark warning to global markets, suggesting trade tensions between the US, China and the European Union could plunge the world into a substantial slowdown.

By AURORA BOSOTTI
Express.co.uk
Thu, Jun 7, 2018

The World Bank report 2018 warned that an escalation of tensions between the world’s three largest economies could plunge global markets into a 2008-level slowdown.

Global financial markets spiralled into an economic meltdown many economists consider to have been the worst financial crisis since the Great Depression.

The European Union, Canada and Mexico are preparing to unleash tit-for-tat trade tariffs on the US in response to President Donald Trump’s decision to impose tariffs on steel and aluminium, fuelling fears of a full-blown global trade war. President Trump also announced his plans to impose harsh tariffs on $59bn worth of Chinese imports.

Talking to France 24, World Bank economist Franziska Ohnsorge said: “We did model, we tried to model, one scenario of possible trade tensions where everyone just raises their current tariffs to the maximum-allowed tariffs under WTO.

“Even such a rule-based scenario of escalating trade tensions would lead to a reduction in global trade of 9 percent which is almost as much as during the global financial crisis.”

The World Bank said the hardest-hit areas in the event of increased protectionist measures would be emerging markets and developing economies.

Ms Ohnsorge continued: “We do still expect growth to be robust at 3.1 percent in 2018 but then for it to slow very gradually.

“Around that slowdown there are sizeable risks and they come from several sources: perhaps the most prominent among them are the possibility of escalating trade tensions and the possibility of financial market disruption.”

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