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The coming depression blog | May 19, 2019

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Weak Global Demand Hurts the World Economy

Weak Global Demand Hurts the World Economy


There are some serious challenges that the global economy is facing in 2014. Recession in Italy and Japan, slowdown in global GDP, need for creation of millions of jobs in the global economy and emerging market economic slowdown are some of the major economic challenges that the world faces today. Another very important issue for the global economy today is weak demand in the global markets. The following are some of the challenges related to weak global demand in 2014:
Weak Global Demand Hurts the World Economy
•    There is a recession in Italy and Japan and the Eurozone is facing a deep stagnation with even countries like Germany faltering on the GDP growth path in 2014.  Weak Global Demand in Europe is a major factor in the global economic woes.
•    Though United States is seeing stronger demand than it has seen since the 2008 crisis, in historical terms this demand is still very low, though the government has introduced strong policies to create demand in the economy.
•    One of the worst performing regions in terms of increasing demand is Europe. Recession in Italy, Stagnation in Europe and weak demand in these economies has resulted in weak GDP data in these countries.
•    Sometimes the changing demographics in society and countries also play a huge role in weakening global demand. Wage rates are not increasing in an appropriate manner and so low liquidity with the public means that demand goes down.
•    Another reason for weak demand is low productivity in many of the countries in Europe and also around the world. Sometimes there is a credit bubble in the market especially in the property sector. When this bubble starts to break demand falls. This is what happened during the global financial crisis in 2014.
•    Sluggish growth in comparison to the needs of the emerging markets is another factor for weak global demand.
•    Stimulus packages pump in money into the market. However there can be a slump in demand in these expanded central bank balance sheets, if they are not stabilized and the root cause of the financial crisis is not addressed. Weak investment due to vulnerable market conditions in economies like Europe and Japan is another reason for low demand.
For the world economy to grow at a good pace, high demand in various economic regions of the world is essential and low demand tends to hurt the global economy and cause economic problems for various countries around the world.

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