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  The events of the past two months clearly point towards   deteriorating global growth prospects ;   rising economic uncertainties ; and   widening geopolitical and trade conflicts . Market participants ought to take note of these dark clouds gathering on the horizon. Deteriorating global growth prospects The US economy flirting with stagflation The US Federal Reserve cut its target interest rate by 25bps to 4%-4.25% last week, after a pause of nine months. The fed officials now estimate two more cuts in the next three months. The Fed decided to continue reducing its securities holdings (Treasury, agency debt, agency mortgage-backed securities) as part of its balance sheet runoff. ·           Economic growth has moderated in the first half of the year. Consumer spending is weaker; and housing remains weak. ·           Core inflation is still above the Fed target. The Fed Chairm...

Global economy The year 2020 witnessed the global economy contracting by 3.5%, the worst peacetime performance after the great depression. IMF has recently forecasted a “strong” (5.5%) revival in 2021 and “normalization” (4.2%) in 2022. Which essentially means the global economy would be growing at less than 1% CAGR over two years (2020-2021). This rather long pause in global growth means serious setback to the development goals of poverty elimination, climate change and inclusion. The fact that this “pause” in growth could only be achieved with trillions of dollars in fiscal and monetary stimulus, highlights that the legacy of global financial crisis (GFC) and subsequent quantitative easing might have materially weakened the growth drivers of the global economy in past few decades, e.g., development of human capital, globalization of trade and commerce, poverty alleviation, productivity growth, etc. The new global survey of 295 economists from 79 countries, commissioned by Oxfam, ...

A decade ago, the global economy slipped into a deep abyss, contracting by more than 2.5% in 2009, as compared with a over 4% growth recorded during 2004-2007 period and a still positive growth of over 2% recorded in 2008. The extent of the slowdown could be gauged from the fact that over 100 countries (including 33 developed countries) all across the world recorded contraction in GDP during 2009. The global financial markets had frozen; large banks were collapsing; some European and Latin American countries were on the verge of defaulting on their sovereign obligations and needed to bailed out by IMF. Amongst all this chaos a group of four developing countries Brazil, Russia, India and China (BRIC) emerged as the savior. These countries recorded sharp growth recovery in 2010 and saved the global economy from slithering into a deeper recession, which many feared could have been much worse than the great depression of 1930s. A decade later, all four BRIC countries...