Spiegel: Germany Prepares for Economic Downturn

International Monetary Fund analysts warn that the global economy confronts multiple risks, and the global banking system is not prepared for a downturn. Stock markets are losing value, and trade disagreements reduce efficiency and heighten uncertainty. Tightening US monetary policy and rising interest rates pose problems for emerging economies that have borrowed in dollars. Brexit, populism and high debt loads are other risks prompting analysts to predicting reduced economic growth. “Many countries are still dealing with the consequences of the last financial crisis,” explains Christian Reiermann for Spiegel Online. “State debt in France and the United States, for example, is about 100 percent of their GDP. If a new crisis were to take place, the governments of many countries would hardly have the financial elbow room for spending programs or tax rebates.” Germany makes preparations for sinking growth by balancing budgets and reducing debt loads to allow for tax cuts, stimulus investment and other financial tools in the event of a recession. – YaleGlobal