Question

valuate alternative theoretically explanations and perspectives of economic problems, issues and decisions in a global context

Answer 1

The loose monetary strategy of the past decade has also driven private & public debt, specially in emergent economies. The debt burden of private firms in nations such as Turkey has considerably escalated since the last financial downturn. Foreign debt is a particular issue in this context. If the escalating rates of interest lead to an appreciation of the Euro & Dollar, then the burden of emergent economies’ dues incurred in these currencies will augment, possibly to unsustainable levels. This risk has also been highlighted by the IMF. An escalating debt burden be followed by currency depreciations & considerable capital outflows. Several emergent economies won't be able to manage this crisis all by themselves.

Problems are also augmenting in industrialised economies. For months now, the U.S & China have been locked in a trade war, increasing tariffs on one another’s imports

The prevailing dispute between the European Commission & Italy on the escalating Italian budgetary deficit also reminds us that we yet have much progress to make to rise above the Eurozone crisis. Actually, the crisis has been briefly controlled by the extremely loose monetary strategy of the ECB & has faded away from the public eye. In the meantime, economic policymakers in Europe are occupied trying to find a feasible solution to the home-made issues of the upcoming Brexit. Failure to arrive at an agreement on this concern would expose the European economy to the risk of an chaotic no-deal Brexit.

Solutions need international cooperation -

And so monetary strategy-makers find themselves in a dilemma. On the one hand, they must try to end the current crisis condition in the medium term & drift away from 0 rate of interest. On the other hand, they must respond aptly to the manifold risks of a worldwide economic downturn. Given prevailing concerns, increasing rates of interest too rapidly / minus global coordination could result in a recession.

Irrespective of whether we look at monetary strategy normalisation, the trade conflict, crises in emergent economies or European concerns with Italy / Brexit, a common pattern appears - ‘our nation 1^st ’ attitudes with a sole focus on apparently national interests & a dearth of international cooperation all can fuel prevailing conflicts. Economic strategy should seek to coordinate international attempts thru podiums like the G20 to lessen political uncertainty & discover common resolutions to the looming concerns in a frail international economic environment