US could drag the whole world into a protracted economic crisis

According to Reuters, the United States is rather ineffective in fighting the pandemic and this seriously affects the global economic recovery. According to experts, if America fails to cope with the virus, then the recession that has arisen will drag the whole world with it.

“When the US sneezes, the world gets a cold.”
Of course, almost all countries depend on the American economy, and therefore fears about the deterioration of the situation in the United States are far from unfounded. The IMF believes that the main risk of the modern American economy is social unrest, and if the level of poverty in the American population increases, it will ultimately slow down the recovery of the entire world economy.

It is worth considering that the United States accounts for 1/4 of world GDP, and the economies of the leading countries of the world depend directly on American markets. Today, supplies of raw materials and goods from Asian countries to the United States are practically not growing, and the decline in exports from Germany in May amounted to a record 36%.

In the United States, support programs were adopted, under which the FRS additionally “printed” and poured $ 3 trillion into the economy. Yet America’s GDP contracted 5% in the first quarter, and this is the largest drop since the 2008 mortgage crisis. In addition, these programs will end in the near future, as their duration is coming to an end. And it remains only to wait for the market reaction to these infusions of “helicopter” money. But already now, experts predict that support for the US economy through the “printing press” will be short-term.

America’s national debt currently stands at a record $ 26 trillion. And by the end of 2020, according to the IMF, it will increase to 131.1% of GDP. By and large, the United States will never be able to give such an astronomical amount at the current level of the economy and vague prospects. This means that sooner or later there will be a recession that will drag the whole world into a new colossal economic crisis.

According to the CEO of the large EU investment fund BNP Paribas Asset Management, Frederic Jeanbon, which he told the Financial Times:

“The whole world is threatened with the onset of the” mother of all recessions “, and a quick economic recovery can not be expected.”
According to Zhanbon, “a V-shaped recovery of the global economy is hardly possible.” And what is now happening in the stock markets – supposedly steady growth – does not at all reflect the real picture in the economy.

Based on a survey conducted by Bank of America, only 14% of fund managers expect a V-shaped economic recovery, some experts (30% of respondents) are inclined to a W-shaped scenario, when after a slight recovery, as now, there will be another collapse. At the same time, 44% of respondents believe that the world will face a lingering, U-shaped, recovery option after a pandemic.