Another global recession could be on the horizon

Flags belonging to both anti-Brexit and pro-Brexit activists fly outside the Houses of Parliament in London on October 22, 2019, as MPs begin debating the second reading of the Government's European Union Bill. Picture: DANIEL LEAL-OLIVAS / AFP

This time, I suspect it will be kicked off by events taking place in the eurozone. In particular, Germany. It would seem then that Germany’s reliance on foreign consumption of its manufactured goods has left its economy exposed. A manufacturing slump has driven the economy into a recession. Unlike China, which has over time managed to stimulate domestic demand, Germany chose to focus on increasing its current account surplus with the US, the UK and China. Furthermore, it ignored or failed to address its over-reliance on external demand for its goods.

For others, like the UK, the malaise afflicting Germany might be an opportunity they simply cannot afford to miss. An export-reliant economy is highly exposed to cyclical global trade, the slowing growth of the world economy, and can often be the loser in trade wars occurring elsewhere.

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