A Gloomy Forecast for the 2013 Global Economy

Article written by guest writer Rin Mitchell

What’s the Latest Development?

From the look of what is happening around the world, 2013 is going to be a very difficult year for the economy—more like a “global perfect storm.” The situation in Greece is not getting any better, and there is still some concern that it will exit the euro. The crisis around the rest of Europe is still being felt, especially in Spain. The economic slowdown in China continues to trigger worries that they are headed for a major downfall. The U.S. is still pushing for a full recovery since the 2008 economic crash and recent reports of its unemployment rate indicates there is still a ways to go. With tensions growing in the Middle East and in Iran, the U.S. looks to be on the verge of a war—whether it is in traditional form or cyber. “These risks are already exacerbating the economic slowdown: equity markets are falling everywhere, leading to negative wealth effects on consumption and capital spending.” In 2008-09, countries were capable of being proactive and had more room to help one another. Because the crisis is deepening in many parts of the world and there has been a major shift in financial positioning for many economies, there is hesitation to do anything—since “unsustainable budget deficits and public debt in most advanced economies have severely limited the scope for further fiscal stimulus.”

What’s the Big Idea? 

While the issues in the euro zone are dire, it’s the issues around the globe as a whole that are making things look real gloomy. “The lack of structural reforms in emerging markets, together with their move towards greater state capitalism, is hampering growth and will reduce their resiliency.” Some very strategic and smart moves are necessary right now or else everything will really start to storm down come 2013. If things don’t start to change for the better, the future will continue looking more and more uncertain.