by Marie Kauna – EMTV Online, Port Moresby
The world economy has recently become a concern for many as results from the slowing Chinese economic markets are predicted to hit many parts of the globe with an abrupt force.
Economic predictions indicate there are many who were not prepared for this onslaught, and will be hit hard by these effects. A lucky few, however, will see their economy remain stable and weather the storm.
The outcomes of the instability indicate that a third wave of deflationary crisis is now hitting the world economy.
With the two past deflationary waves hitting the world’s economy hard, economists predict this wave is different than what was experienced in the past two occurences.
Based on the analytical assessments of the three deflationary waves, this wave is believed to come as a result of the emerging market crisis, and the possible outcomes according to Global Chief Investment Officer, Equities at Fidelity Worldwide Investment, Dominic Rossi, “this third deflationary wave means that world GDP will continue to operate at a level below potential output.”
In addition, Rossi added that “in the next few months, we may reach a bottom in absolute price terms for emerging market securities but past experiences teaches us that it takes years of capital scarcity to restore capital and cost discipline after years of over investment.”
“Adjustments to world GDP forecasts are still ahead of us,” says Rossi.
