Reasons why global growth may slightly slow down
Olivier Blanchard, Chief economist at the International Monetary Fund, named three main risk factors that may slow the global growth in an interview to CNBC.
According to Mr. Blanchard, principal risk factors for the global economy are:
1. Chinese authorities wishing to rebalance the economy towards domestic consumption. This means the country may reduce the share of foreign investment and borrowing. But as the PRC currently has no such internal resources that will allow to fully replace the external ones, economic growth rate may decline.
2. Abenomika, a Japanese experiment in monetary and fiscal stimulation designed to put an end to chronic deflation. This program carries a lot of inherent risks, which have not been fully calculated and cannot be predicted.
3. Program of quantitative easing of the US Federal Reserve, which involves maintaining discount rate at 0-0,25% and large-scale interventions in the securities market in the monthly amount of $ 85 billion, where $ 45 billion to redeem federal treasury's long term debt and $40 billion to redeem mortgage-backed securities.
