In early 2016, the Economist Intelligence Unit released a breakdown of their analysis
of the biggest threats to the global economy.
One of the top threats was actually the possible election of Donald Trump as president.
They predict that his opposition to free trade and criticism of China and Mexico, which are
massive trade partners, poses significant risk to the economy.
But Trump is only sixth on the list, so we wanted to know, what are the world’s biggest
economic threats?
Well, the health of the economy is crucial to stability around the world.
Several leading threats are centered around the European Union.
The EIU notes that Greece’s ongoing debt crisis might be stemmed by the latest austerity
measures and bailout.
However, the risk of Greece refusing to abide by the restrictions, and eventually leaving
the EU could create a world of trouble for the international markets.
This “Grexit” is especially feared because it would destabilize the surrounding countries,
leading to the third biggest threat: a breakup of the EU.
In recent years, the EU has been struggling to maintain cohesion.
With more than a million migrants arriving in Europe, a continued recession following
the 2008 global banking crisis, and terror attacks in Paris, the EU is in trouble.
Many parties calling for a breakup of the EU, or stricter borders in the “free travel
Schengen zone” have been seeing increased popularity.
Even the United Kingdom is gearing up for a referendum to leave the European Union,
sparking fears that other countries may follow.
A breakup of the EU would be disastrous for a huge number of trade agreements and established
economic treaties.
This could possibly plunge Europe into an even deeper financial crisis, thus destabilizing
global markets.
The second biggest threat to the economy isn’t actually economic at all.
Russia’s military intervention in Syria and the annexation of Crimea has many worried
about a new Cold War between The US and Russia.
This competitive political fight complicates a number of existing organizations like NATO
and the G7, and implies an increase in defense spending on all sides.
This takes away from goals like fighting ISIS and global warming, and could easily destabilize
the world economy.
But according to the EIU, the single biggest threat to the global economy is China.
China has been growing at a massive and rapid pace, but in recent years the level of growth
has been called clearly unsustainable.
Despite efforts to manipulate their currency and markets, the renminbi currency is still
relatively weak, and their economy has a huge amount of unrecoverable debt.
China’s role as a manufacturing and commodity trading leader means that a slump for them
is a slump for consumers and businesses worldwide.
Although there are a lot of things to be afraid of, the EU, China, and Russia pose the biggest
threats to the stability of the global economy.
What’s worse is that all of these scenarios are ranked highly because they are also the
most likely to occur.
By comparison, a Trump presidency is only rated as “moderately probable”.
But if the EU falls apart, China’s economy keeps dropping, and a new Cold War emerges,
Trump may just be the least of anyone’s problems.
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