Economic Slowdown In Essay

Economic Slowdown In Essay-18
Therefore, the decline in China has managed to stop the FED from rising interest rates, not only because of creating very low inflation through a fall in the value of commodities but also through harming emerging economies revenues, putting more strain on them to pay off their debts and avoid bankruptcy which would only be made much more difficult if interests rates were to rise.

Therefore, the decline in China has managed to stop the FED from rising interest rates, not only because of creating very low inflation through a fall in the value of commodities but also through harming emerging economies revenues, putting more strain on them to pay off their debts and avoid bankruptcy which would only be made much more difficult if interests rates were to rise.Unfortunately, there are no other countries currently around that would be able to achieve the same sort of growth and demand that China did, leaving commodity prices and many of the largest commodity production lines to work below maximum potential capacity for some time to come.

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Meanwhile revenues at British Petroleum have gone from $94.77B in Q3 of 2014 to now 61.80B Q2 2015.

This sort of volatility and the revenue fluctuations it has created have extended to these companies stock prices and beyond to the market as a whole as investors have panicked and pulled out of many positions.

The first consequence of this decline in commodities has been an increase in volatility and harm to revenues of commodity exporting and energy firms around the world.

An example of the sort of volatility experienced is of Brent crude which moved from $43 to $54 during just one week at the end of August before falling back down again the next week.

Find more statistics at Statista The existence of this slowdown and shift away for investments is a disaster for commodities.

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China is the world’s biggest importer of crude oil consuming one of every 13 barrels globally, it also imports 45% of the world’s copper and almost half of global aluminium, nickel and steel.

There is the hope that Africa and in particular Nigeria, South Africa and Kenya, will be able to continue growing at a fast enough pace to soon take up the slack in demand created by China but these countries combined still have a lower population and GDP than China alone.

The growth of African countries will be made even more difficult if China reduces its current amount of trade and foreign direct investment which previously were predicted to reach 0 billion and 0 billion respectively by 2020.

The proportion of CFOs who think now is a good time to take risk has dropped to 46%, down from 59% in the second quarter and a peak of 72% a year ago (this decline from a year ago is correlated to the beginning of the realisation of China’s slowing growth).

The evidence all proves that the declines in commodities have been harmful and widespread for firms.

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