So far this year gloom has dominated the headlines – falling stock markets, low commodity prices, risks of debt crises in developing countries and risks of deflation. Some banks have even recommended investors sell everything other than “safe” (usually government) bonds; while the Chancellor George Osborne has talked about a “cocktail of [global] threats” to the UK economy.
Both the IMF and the World Bank have revised their global growth expectations downwards for this year. Low growth will particularly affect developing countries which need GDP growth to increase living standards.
The economic press often presents the drivers of these risks as being independent from each other. But it is worth asking whether it is possible to connect the dots between them.