Over the past few months, stock markets from all over the world have fallen drastically. Some economists are worried about a global slowdown in economic growth.
China has been a driving force of strong economic growth for over a decade. However, the United States imposed a massive tariff on Chinese goods this year. The duty is already impacting companies based in China. Some manufacturers are moving production to other countries in Asia.
Some economists also believe that a real estate bubble is occurring in China. A huge percentage of real estate properties are vacant in the country. Many wealthy investors purchase properties as investments, but no one lives in the homes. A slight downturn in the real estate market could create drastic issues in the coming years.
Great Britain shocked the world with the decision to leave the European Union. Since that decision, the economy of Great Britain has improved drastically. Many people feel like the country is on a stable path for economic growth in the coming years. However, other nations in Europe are struggling. France has an economy that is slowing. Not only are prices rising, but the unemployment rate is the highest it has been in multiple years. New gasoline taxes have made things much worse for people living in France. Riots in major cities are a common occurrence.
The United States has the largest economy in the world. However, the stock market has dropped nearly 20 percent since October. Multiple political issues in the United States could hamper economic growth. Some people believe that President Trump will increase the tariff on Chinese imports. If the duty is increased, the cost of nearly every product will rise for consumers.
There is also a lot of political turmoil in the United States. Until a resolution is passed dealing with a border wall near Mexico, it appears the United States will endure more political strife.
Another factor that could lead to a prolonged recession is that global debt levels are extremely high. A slight decrease in economic growth could signal fiscal issues for multiple nations across the world. In 2011, Italy and Spain endured severe financial problems because of debt levels in both countries.
Although multiple factors could cause stock markets to continue falling, some investment analysts believe it is an excellent time to purchase stocks. Investors need to be prepared for additional volatility in the coming months.