Return to our Home page Search
Click here for the hotel and hospitality news from around the globe Hotel, Travel and Hospitality Articles Videos and in-depth Interviews
CONCIERGE DESK
Read more now
Read more now
Read more now
The Great Uncertainty.
Thursday, 5th January 2012
Source : Rabobank
 

The US subprime crisis marked the beginning of a period we would call the Great Uncertainty; since the summer of 2007, the global economy has been rolling from one crisis to another.

The lesson we can draw is that the world has become a much more unstable and uncertain place. Our base case scenario is that the post-crisis recovery will be bumpy, below-par and brittle until the deleveraging process comes to an end.

Meanwhile, the global economy continues to face major risks that can potentially knock it off course. The six most important known unknowns are discussed in six separate Special Reports. Below, we will give you an overview of all six risks with our brief conclusions.

1. Risk of a complete breakup of the eurozone
Pushing the periphery to carry out a cocktail of reforms and austerity measures may not be sufficient to restore market trust. In our view, once European leaders truly begin to stare into the abyss, they will do ‘whatever it takes’ to resolve this crisis. This is far less costly than the alternative.

2. Risk of sovereign debt crises in the US and Japan
Borrowing costs in Japan and the US remains very low. The danger is if these two countries begin to feel ‘market-proof’. Without more ambitious fiscal consolidation, a sovereign debt crisis remains a distinct possibility.

3. Risk of financial repression in the West
One cannot help noting that one of the by-products of the design principle of the current financial regulatory framework is to make it easier to work down the massive public debt overhang. If such muzzling of the financial sector leads to full-scale financial repression, then potential growth in the global economy will drop at the worst possible time. We hope that policymakers will stay clear of such policies.
 
4. Risk of hard landing in China
We see the soft landing scenario as the most likely for 2012. However, the financial sector has weakened as a result of strong credit growth and is particularly vulnerable in light of the increased headwinds. With external demand slowing as well, a soft landing scenario is becoming more and more dependent on strong growth-supporting policies. If the Chinese authorities fail in their efforts, a hard landing scenario could materialise after all.
 
5. Risk of sudden reversal of capital flows from the emerging markets
The risk of an outright, massive reversal of foreign capital flows is rather limited, although not impossible. A comforting factor is that many EMs have room to spare to stimulate their economies. Unfortunately, this doesn’t hold for all EMs.

6. Risk of de-globalisation
We see protectionism rearing its ugly head around the globe. After the initial exchange of fire started with the currency wars, nations are increasingly moving towards total economic warfare. Should policy makers in Europe finally be able to work together in order to get the economic house in order, that may send a strong signal to the rest of the world that cooperation by far outweighs navel-gazing.

www.rabobank.com

~ Important Notice ~
Articles appearing here contain copyright material. They are meant for your personal use and may not be reproduced or redistributed. While 4Hoteliers makes every effort to ensure accuracy, we can not be held responsible for the content nor the views expressed, which may not necessarily be those of either the original author or 4Hoteliers or its agents.

Learn more about DigiJames - in room technology
Advertisment  
 Latest News  (Click title to read article)
China Outbound Tourism Yearbook highlights 4 major market trends in 2014
Monday, 21st April 2014

Differentiation is needed for South Pacific destinations
Monday, 21st April 2014

The highest-rated green hotels in the US
Monday, 21st April 2014

Overcoming seasonality to support economic diversification
Monday, 21st April 2014

Ritz-Carlton reveals its secrets
Sunday, 20th April 2014
 Latest Articles  (Click title to read article)
Knowing Your Customers' Preferences
Monday, 21st April 2014

It's All in the Preparation: Planning Your Perfect Holiday Online
Monday, 21st April 2014

Are You Trying Too Hard, or Not Hard Enough?
Sunday, 20th April 2014

Do Your Job Descriptions Inspire Greatness?
Saturday, 19th April 2014

Creativity & Passion - Keys to Wowing and Returning Guests
Friday, 18th April 2014
 Most Read News  (Click title to read article)
Follow us: LinkedIn, Twitter and Google+
ITB Berlin 2015 Marketing Programs
ITB Berlin 2014 - The Full Coverage
Global Travel Trends 2013/14
Tourism brand: 'Spain' reviewed

© Copyright 4Hoteliers 2001-2014 ~ unless stated otherwise, all rights reserved.
You can read more about 4Hoteliers and our company here

Use of this web site is subject to our
terms & conditions of service and privacy policy