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How Risky is the Global Economy?

While the obstacles to sustainable global economic growth are not yet sufficiently serious to derail the ongoing recovery, it would be foolish to gloss over them. Nowadays, four major risks are looming larger in importance and becoming more threatening in character.

NEWPORT BEACH – Three years after the global financial crisis, the global economy remains a confusing place – and for good reasons.

Should we draw comfort from gradual healing in advanced countries and solid growth in emerging economies? Or should we seek refuge against high oil prices, geopolitical shocks in the Middle East, and continued nuclear uncertainties in Japan, the world’s third largest economy?

Many are opting for the first, more reassuring view of the world. Having overcome the worst of the global financial crisis, including a high risk of a worldwide depression, they are heartened by a widely shared sense that composure, if not confidence, has been restored.

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    A Global Economy Without a Cushion

    Stephen S. Roach

    From 1990 to 2008, annual growth in world trade was fully 82% faster than world GDP growth. Now, however, reflecting the unusually sharp post-crisis slowdown in global trade growth, this cushion has shrunk dramatically, to just 13% over the 2010-19 period, leaving the world economy more vulnerable to all-too-frequent shocks.

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