Many people are looking for explanations as to why the wind has gone out of the sails with the growth in Europe, the U.S. and China. Growth has almost stopped in some places in the manufacturing industries. The most serious is perhaps that Germany has had a severe slowdown and a noticeable drop in industrial production. In the U.S., there are indications of a crisis where more and more people are unable to pay their loans.
The International Monetary Fund (IMF) recently estimated that growth will be significantly weaker in 2019 than in previous years.
At the meeting at Finansforbundet, Torsten Sløk, Deutsche Bank's senior economist, was kind enough to explain that even though growth has slowed, at Deutsche Bank they believe that "the global problems are not so serious as to cause a new economic recession".
However, the message from Deutsche Bank is that there is a risk of a trade war and the basis for that concern is that the U.S. has chosen to be relatively aggressive towards the rest of the world.
Where is the growth?
According to Torsten Sløk, China's economic scope is relatively limited and over the past three years China has had a political goal of not increasing indebtedness.
If you look at German debt relative to GDP, Germany has been saying for the past few years that we shouldn't spend more money than we have. We're the ones who always pay our bills.
If we look to the U.S. to study where the global economy is heading, it is notable that there has been an increase in people who can't pay their loans on time since 2016/17.
As he explained his concerns, Torsten Sløk revealed the warning signs he considers significant:
"Unfortunately, the situation is that inequality is on the rise in the vast majority of countries and the U.S. is at the forefront. Never before have so many Americans been without any wealth, meaning fewer own their own homes and fewer own shares", he said, adding that inequality is a key reason why we have populism and that's why investment funds and pension funds have something to worry about.