Getting ready for the next global recession?

In an article by a prominent economist, Tan Sri Lin See Yan in The Star, it was entitled, “Watch out for the next global recession.” To summarise, in the recently concluded IMF/World Bank annual meetings in Lima, Peru, global economic outlook appears to be a gloomy one. Growth forecasts were downgraded and it is now expected to be 3.1% in 2015, the lowest since the 2007/2008 crisis. US economy remain weak and Germany, the leading nation for European Union is facing falling exports and industrial production. China is leading a downturn in emerging market economies(EMEs). I think this includes Malaysia as well.
In fact, simulations by IMF showed that the worst case scenario would be that the world’s growth falling to just 2 percent which is already regarded as a global recession. Citibank forecasts that a global recession will happen in 2016. In fact Japan is already on the verge of recession and Europe faces the potential of deflation. EMEs continue to show weaker growth as well. In fact for EMEs as a whole, 2015 is already the 5th consecutive year of growth decline. Main causes include poor productivity and low aggregate demand which is compounded by an aging population and political instability. Majority of commodity exporters experienced a sharp fall in their currencies against the US$.
Okay, enough of these bad news. If you want, you can read that long article in The Star. Just drop by their online site. The question that is on my mind would be what would be some of the potential opportunities that may appear in the next few months. Perhaps the current slowdown in property transactions would get worse before it gets better? Maybe the current stock rally may not last and Ringgit’s current value may drop further? If we are eyeing the property market, have we identified that few properties that we would like to buy if prices fall? Read here: Why 10 percent is significant to me How would you choose some undervalued stocks which should still perform well and thus the upside potential is there once BURSA’s bull returns strongly? Read here: Undervalued is slow. Speculating is fast I think it’s better that we prepare and not just be forwarding all these negative news around and yet doing nothing about it. Whatever happens to the world will not give you money for your retirement. Whatever you do would. Happy deciding.
written on 24 Oct 2015
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