Romanian central bank adviser Lucian Croitoru says the world is approaching a recession as bad as the financial crisis of 2008, in comments made at the EU-COFILE seminar organized by Alpha Bank, the National Bank of Romania and the Romanian Banking Association.
Our economy operates in cycles. We go through periods of economic downturns. We then recover, expand, oversupply, and start all over again.
Economists have measured expansion cycles for the past 165 years and none has lasted longer than 10 years_ except this one.
Croitoru, an adviser to central bank governor Mugur Isarescu, said Thursday that we are in the longest period of economic expansion in the history of the U.S. with 122 months of continuous growth.
“If something bad happens in the U.S, it’s impossible that it won’t affect us,” he said.
Economists says that the global economy is just over the 10-year mark since we started to recover from the recession of 2008, with many considering the market is due for a correction.
“It will be a recession similar to the one in 2008, an abnormal one,” Croitoru said.
In the face of widespread trade tensions and slowing global growth, the US Federal Reserve cut its benchmark interest rate on Wednesday for the third time this year.
The Fed reduced its short-term borrowing rate, which influences a broad range of consumer and business loans, by one-quarter percentage point to a range of 1.5 percent to 1.75 percent.
This year, rising global risks have led the Fed to change course and begin easing borrowing costs. Lower rates are intended to encourage more lending and spending to support growth.
Croitoru said earlier this year that “fiscal policy is contributing to the economy’s overheating and capital inflows are high. The results are similar to those recorded before 2009: we have unsustainable structural fiscal imbalances, relatively large external imbalances (the second largest current account deficit in the EU) and an external debt of EUR 103.7 billion (in June 2019),” he wrote on his blog.
More than two-thirds of Americans are preparing for a possible recession, according to a survey carried out by YouGov for personal finance site, Bankrate.com, MarketWatch said.
Some 69% said they were taking measures to protect their financial situation before a possible slow-down of the economy, of which 44% said they would spend less money. Some 10%, including graduates, said they would look for more stable jobs.
