Preparing for a Global Economic Slowdown

When the International Monetary Fund (IMF) leadership speaks, everyone in the financial world takes notice. A recent indication by this leading institution noted that there were levels of poverty and unemployment on a global scale that may cause the world to be mired in sub-par growth. Savvy investors can read between the lines of this slightly ambiguous statement that the IMF has concerns about the financial future globally – a statement that the IMF is unlikely to make outright.

Deciphering What They Mean

The IMF knows how closely their language is watched, so they are supremely careful not to say something that could start a global shock wave of people pulling money from their investments. The IMF has started hinting that central banks need to be cautious navigating the transitions in a way that supports continued growth – and not with the accommodative monetary policies that they’re currently engaged in which are contributing excessive debt to the global system. Faced with debts, the global economy is in a shaky place.

Vicious Cycle

As top-line growth becomes ever more challenging to achieve for many organizations, they are forced to focus on the bottom line. When companies reinvest in their individual shares, they are effectively growing their earnings per share (EPS) but in a way that is unhealthy because it is robbing the future for short-term gains. As the cycle of layoffs continues, layoffs grow; which in turn causes consumer confidence to drop and many people spend less – meaning that companies’ profits continue to plummet and the demand for commodities drop.

Once the Federal Reserve (‘Fed’) gets involved, interest rates may hike, which makes the cost of borrowing even higher. It is all a confidence level at that point. Will rates continue to hike? If that perception takes hold, then the Fed will not hesitate to note that rates can be lowered again if growth slows.

Economic Projections

At this time, China has managed to overbuild and overleverage – two very dangerous situations for the global economy due to the size of China’s economy and impact on the world overall. There are plenty of aging populations around the world; something that adds distinctly to the country’s cost structure.

There’s no way around the fact that the economy of the world appears to be slowing and that means that the stock market will eventually take a tumble as well. How hard and how fast are the question. And if the market start to tumble what will then happen to loan market. We will probably see more sites like, were many different payday lenders are listed. For when the market slows down, the need for financial aid becomes greater.

Leave a Reply