The world economy appears to have somewhat rebounded from the 2008 crash. However, there are people that believe the economy is going to head downhill yet again. A very successful investor by the name of George Soros feels that yet another crash is yet to come. Currently, there are different things that are taking place with the world economy that could cause instability. China’s economy was doing very well in the past, but now there appears to be instability in the Chinese economy. If their economy takes a downturn, it could potentially impact upon the global economy. It could impact upon western countries too.
George Soros is widely known for being a successful businessman and billionaire. He delivered a speech in Colombo, Sri Lanka recently. This speech discussed the current economic situation, and he commented on how China’s economic troubles have the potential to cause the global economy to go back down the drain. The Chinese yuan is currently being seriously devalued. The cause of this economic downturn is changes in the economic structure of the country. China’s economy used to be primarily centered around industry, but now it is shifting to consumerism. This is a common transition for an industrialized nation to make. However, the country is not adjusting to the changes well. The changes have effectively halted the growth of the Chinese economy. This is causing Chinese stock markets to drop. This has caused large amounts of monetary losses. George Soros feels that this could create a situation that is just as bad as the crash of 2008. He says that the situation has many parallels to the state of the economy during 2008.
In addition to China’s market being impacted by this downturn, economic predictions are also turning increasingly negative. The Chicago Board Options Exchange Volatility Index has taken a dive. This measure of volatility has risen by a full 13 percent. This is a marked rise in predictions of market volatility. There is yet another measure of market volatility that is showing an even more dire forecast. The Nikkei Stock Average Volatility Index has gone up 43 percent. This is scale that is used in reference to the Japanese stock market. A third measure of volatility has also risen in response to the Chinese economic problems. Merrill Lynch forecasts price swings in Treasury Bonds. This scale has risen 5.7% as a result of the Chinese economic situation. One can expect an increased risk of volatility, according to George Soros and other investment experts.
Hopefully, the dire predictions that George Soros is making for 2016 do not come true. However, there do seem to be some frightening things occurring in the global economy. China clearly has been experiencing a very serious slowing of growth. This definitely could cause negative effects on the whole world economy.