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Monday, January 14, 2019

North America and Europe will slip into recessions faster than Asia.

https://sg.finance.yahoo.com/news/chinese-fdi-north-america-europe-falls-73-percent-001555773--business.html

Without FDI growth, North America and Europe will slip into recessions faster than Asia.  Why?

Let's look at the tabulation of GDP.

GDP = G + I + C + Net export(X-M)

FDI is I under the GDP tabulation formula and GDP will be affected if there is little or no FDI.  Since China is importing much lesser now, many countries net exports will be affected.  North America and Europe don't have the deep coffers for fiscal stimulus which is under G.  The consumer spendings (C) are also not great in North America and Europe because many people in these countries don't have high spending powers.  Just look at the unemployment rates and yellow vest protests and you will know what I mean.  Furthermore, the US is forcing many countries to buy US goods and reducing their exports to the US.

1 comment:

Eric Ho said...

https://www.theguardian.com/business/live/2019/jan/14/china-trade-slowdown-exports-us-surplus-eurozone-industrial-production-business-live

This article corroborates our post. Yeah!