Global Recession Risks Are Up, and Central Banks Aren’t Ready

The global economy has shown signs of a strain internationally, and it is unclear whether or not national banks are adequately prepared to face any potential crashes.

Specifically, the United States economy hints at an imminent recession amidst trade tensions and hiatuses with other nations.

Similarly, Germany has faced higher unemployment rates, while Japan is experiencing lower production than usual.

Prior to the 2008 financial market crash, central banks across the world cut rates, heightened governmental assistance, and lent money to banks, which helped prevent an even further devastating outcome from occurring. However, interest rates are lower than ever, presenting potential problems given a possible recession.

According to the New York Times, “Major central banks have failed to hit their 2 percent inflation targets during this expansion, heightening the risk that prices will slip dangerously low come the next downturn.”

These statistics are especially worrying at a time in which cooperation and collaboration between governments are contentious as trade and currency wars have rapidly risen.

The budget deficit in the United States is on track to surpass one billion this year following tax cuts and increased government spending. However, the future is ambiguous as the 2020 presidential election draws near.


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