Italy is squaring up for a clash with investors over its fiscal plans, with implications for debt costs, while there’s no end to the uncertainty surrounding Brexit in the U.K.
Then there’s emerging markets. Turkey’s lira has plunged amid a political crisis, Venezuela has executed one of the biggest devaluations in history and Argentina is jacking up rates to protect its currency. While none have the heft to drag the global economy into a recession, the resulting fallout on markets could be a blow to confidence if the pain spreads to emerging market powerhouses such as Brazil.
Tom Orlik, chief economist at Bloomberg Economics, doesn’t expect emerging markets take down the world. He observes that excluding China, emerging and developing economies accounted for 24.6 percent of global output last year, down from a peak of 26.7 percent in 2013.
Asia’s slowing bears watching. Excluding Japan, the region’s contribution to global growth was 40 percent in 2017 compared with 23 percent in 2007, reflecting its larger economic size and deepening integration with the world, according to Robert Subbaraman, Singapore-based head of emerging markets economics at Nomura Holding.
“It is no longer a question of ‘if’ but more a matter of ‘how much’ Asian growth will slow in the second half," Subbaraman said.
This article was provided by Bloomberg News.