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Present Dangers That Can Rock the Global Economy

| Mar 10, 2017 08:10 AM EST

Although the global economy continues to grow from strength to strength, the world isn’t spared from dangers posed by its current state of affairs.

There's no doubting that the global economy continues to grow from strength to strength, thanks to the continued practice of neoliberal values as the world continues to grow its internationalized character. Nonetheless, the world isn't spared from dangers posed by its current state of affairs.

The Organization for Economic Cooperation and Development (OECD) shared its latest economic outlook, indicating that the global economy is facing a set of challenges that involve the rise of protectionism, aberrations in the stock market, and real estate bubbles waiting to burst.

Protectionism

Although the likes of Donald Trump in the U.S. and Theresa May in the U.K. have repeatedly bandied protectionism as the benchmark of domestic job creation, the same doesn't bode well with reality. Retracting from trade openness can cost jobs, particularly those formed through foreign investment.

With several jobs worldwide rooted in global trade, more people are set to lose jobs in the event protectionist policies are imposed in their fullest force. The idea that domestic industries should be prioritized over foreign ones can backfire to the same people blaming job loss to outsourcing baselessly.

Stock Market

Global stock markets are at risk of wholesale reassessment concerning high interest rates, which in turn could result in a crash, Fortune reported. Once interest rates are deemed to be too high in relation to dismal bond yields, investors would then prompt asset repricing.

Real Estate Bubble

As the world grows richer, property prices continue to balloon as well. But when the time comes that real estate values outdo real property prices, a real estate bubble burst would be inevitable, in turn leading to the collapse of financial systems at the ultimate expense of the global economy.

With the ratio between property prices and rental values continuing to grow apart, more people will begin to realize that investing in a home would mean submitting themselves to overvaluation, what with the fact that real estate values are set to increase rates further.

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