Watch Out For Stagflation Under Economic Recovery

Finance

The crisis has broken out for 3 years, but the recovery process in developed countries is much lower than in the past.

With the expected withdrawal deadline of the second round of quantitative easing monetary policy of the US Federal Reserve approaching, the prospect of US economic recovery has once again aroused people's concern.

At the same time, the aftermath of Japan's economic crisis, and the European debt crisis's crackdown on the market cycle, have also released unoptimistic market signals.

In addition, emerging market countries have tightened policies to curb economic overheating.

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Policy withdrawal.

Since the outbreak of the international financial crisis, the US economy has become increasingly addicted to loose monetary policy.

With the expiration of the policy, it is a natural reaction for investors and consumers to reduce the expected economic recovery.

Even if this policy expires, the United States will continue to maintain low interest rates and expansionary fiscal policies.

If the US economy slump and the unemployment rate rises again, it will not rule out the possibility of the implementation of the third round of quantitative easing monetary policy.

Second, the US fiscal deficit and debt risk.

Not long ago, the controversy between the White House and Congress about the annual fiscal deficit came to an end, avoiding the embarrassing situation of government shutdown.

The prospect of a worse future is that if Congress fails to approve the $14 trillion and 300 billion cap, theoretically, at some point in the second half of the year, the United States will be likely to default on sovereign debt.

To this end, financial intermediaries have given the United States a "yellow card warning".

To avoid this, the game between the White House and Congress is expected to finally come to a compromise.

Third, the way out for Europe's debt crisis.

The Greek debt crisis has set off a new round of turmoil and may trigger sovereign debt crises in other countries in southern Europe.

As one of the rescuers, President of the International Monetary Fund will also add uncertainty to the EU's final rescue plan.

But it is certain that in the foreseeable future, the euro zone powers will not allow the Greek debt crisis to threaten the survival of the euro. Instead, it may inspire euro zone countries to strengthen cooperation at a higher level, such as the recent proposal to establish "European finance ministry".

From the real economy, the growth rate of the euro zone has not stopped due to the Greek debt crisis.

Fourth, the impact of the Japanese earthquake on the real economy and the East Asian industrial supply chain.

This negative impact has been reflected in the latest statistics.

According to the empirical relationship between natural disasters and economic growth, it is estimated that the pulling effect of post earthquake reconstruction on economic growth will emerge from the third quarter.

Fifth, can emerging market countries curb inflation without slowing the economy?

Since the second half of 2010, the pressure of inflation and economic overheating has been widespread in emerging market countries, especially the inflow of foreign capital and the sharp rise in global commodity prices, which further aggravated domestic asset price inflation and inflation.

For this reason, the emerging market powers have implemented the policy of economic austerity.

Considering that the economy of the developed countries has slowed down obviously, emerging market countries will not exchange the domestic economic slowdown sharply for the purpose of reducing inflation.