Thursday 19 January 2017

Will China's crash trigger a new global recession?

The weak post-2008 recovery is nearly over. The Chinese market crash means trouble and we in Ireland will not be spared

Published 12/07/2015 | 02:30

'Even more worrying has been the response of the Chinese authorities to the crash'
'Even more worrying has been the response of the Chinese authorities to the crash'

The weak post-2008 recovery in the global economy is drawing to a close. Greece, China, falling bond and equity prices, all point to trouble ahead. With one of the world's most open economies, we in Ireland will be among the first to feel the draft.

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Following the stunning success of the "no" camp in last Sunday's referendum all eyes have been focused on Greece. Will the Mediterranean country be able to agree a package with its creditors that allows it to stay in the euro or is 'Grexit' finally upon us? If Greece does become the first country to exit the single currency what, if any, will be the consequences for the rest of the eurozone?

While the fate of Greece is not entirely irrelevant it should be borne in mind that, with annual GDP of less than €240bn - just over 2pc of the total eurozone economy - its capacity to damage the overall European economy is limited. Indeed the main threat from potential Grexit is almost certainly psychological rather than economic as nervous investors ask "who's next" in the wake of a Greek departure from the single currency.

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