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Thread: Why the world economy is flat

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    Senior Member fxtester's Avatar
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    Nov 2008

    Default Why the world economy is flat

    1) - The interest rates are low > less investors.

    The investors prefer to keep their money on their banking accounts as the currencies are not attractive anymore.

    The central banks are reducing their interest rates to respect the economic policy with their inflation target (about 2%). They don't have enough margin anymore to play with in order to fulfill their objective, that's why they keep the rates low.

    FED Federal Funds Rate, RBA Official Cash Rate, BoE Official Bank Rate

    BOC key interest rate, PBC base interest rate, ECB refi rate

    BoJ overnight call rate, RBNZ Official Cash Rate, SNB target range

    Source : global-rates

    2) - The European debt crisis is still not resolved.

    3) - The employment flexibility is difficult in certain areas. The companies don't want to take the risk to employ people that they will have to pay dozens of thousands to fire if the revenues are weak.

    Euro Zone unemployment rate

    Source : tradingeconomics

    3) - Domino effect.

    As the energy demand is low, the oil price is weak. In consequences the countries economy essentially based on oil are declining, like Canada.

    Canada unemployment rate

    With the same logic, as the Chinese economy is reducing, they stop to buy gold and other metals, essentially sold by Australia.

    China's total investment, China real annual GDP growth

    Source : livemint

    Australia unemployment rate
    Last edited by fxtester; 06-14-2016 at 11:26.

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