5 Current Global Economy Issues That Everyone Ought to Know

As the world economy enters the dawn of 2015, it gives us an opportunity to look back at reflection and also a chance to look ahead to analyze the signs and trends of global economy. There are several issues that may influence the global economy in the future. We will discuss five of them in this article.

The global economy has gone through challenges and hard times in the last decade. Recently, we have seen one of the biggest recessions in global economy since the 1930s. The question still remains in 2015, where is the global economy heading? Will the global economy completely recover from the recent hardships or will it head back towards another recession? Here are 5 challenges and predictions made by expert analysts that will preoccupy us for the rest of the 2015.

1. Oil Prices

There was a big drop in oil prices observed in 2014. A barrel of Brent crude oil dropped from $115 in the summer of 2014 to about $50 a barrel around Christmas (Oil-price.net). The big drop in oil price was seen as a positive sign for growth of the global economy by many experts (The Guardian). Both business and individuals benefited from the falling oil prices.

There is an obvious correlation between economic growth and falling oil prices around the world. Business and individuals benefit from lower costs of transportation and production, and It has been observed many times in history. For example, the long economic boom seen in 1948-1973 and the period that preceded the great recession of 2008-09 were both built on cheap oil.

With dipping oil prices, the U.S oil companies are facing tremendous pressure. It’s already effecting fracking, oil production, and all other related industries, and it also impacts the stock market.

2. Widening of income & wealth differences

Deepening income inequality and uneven distribution of wealth remains one of the key challenges for the global economy in the 2015. It was identified as the most significant trend of 2015 by experts (World Economic Forum) and also America’s biggest and most difficult problem. “Rising inequality of income and wealth will be the most important political battleground over the next few decades”, says Sean McElwee, a writer and a research associate at Demos.

One solution is to increase taxes on property and income, but the rich won’t let it happen, says Sean McElwee. The problem is that the poorer half of the population often controls less than 10% of its wealth, limiting their opportunities and decreasing the quality of life. This is a universal challenge that the whole world must address.

3. Federal reserve and interest rates

Interest rates have been in a record low range since December 2008 staying between zero and 0.25%. However, there were forecasts and signs from the Federal Government that the interest rates would soon rise again in 2015, but the time and rates are not certain yet. “For now, and for the foreseeable future, you can count on volatility” – says Suzanne McGee, financial journalist and the weekly columnist for Money US.

“Right now, markets are focused on answering one question: when will the Federal Reserve raise interest rates?” – Myles Udland

4. Decreasing level of employment

The current situation of job market in the U.S as well as the global economy is often referred to as “persistent jobless growth” where economy is recovering from recession and showing growth but without increasing, or barely maintaining the level of employment or income level.

According to the Bureau of Labor Statistics – “Total non-farm payroll employment increased in the U.S by 126,000 in March 2015. The unemployment rate stayed unchanged at 5.5 percent, and the number of unemployed persons has also stayed the same about at 8.6 million.”

The need for creating new jobs has become essential for making true economic progress in the United States. Finding a steady supply of skilled workers in the fast progressing market can also be a real challenge.

“The transformations and job displacements associated with technological progress are happening faster, and may even be more dramatic in their impact than anything we’ve experienced before” says World Economic Forum

5. Lack of leadership

According to a recent Survey on the Global Agenda 86% of the respondents think that there is a leadership crisis around the world today. The majority of the people feel that the world leaders have failed to address the current global issues around the world. World leaders are also being blamed for failure to deal with global economy issues, resulting in economic crisis around the world.

This brings us to raise another question, why is the world suffering from such a lack of leadership? One of the main reasons that hinder global economic growth is corruption. Many of the African, Asian and Latin American countries have identified corruption as a major problem, and in many countries like India and China, it has been identified as the major issue.

Why are political leaders, around the world, failing while the business sectors are doing so well? Because we’ve had a surge of incredibly smart and qualified people becoming business leaders, building great companies, and contributing to the growth of our economy.

According to the survey, non-profit organization leaders ranked at the top while the business leaders ranked second in leadership. We have seen great innovations and fast growing technology coming out of private companies. Nonprofit organizations have been doing a great job in addressing global issues and this has made us realize that we can do a lot better.

“By contrast, when we look at our governments and international institutions, it is tempting to only see ritual, politics, and little progress, and to wonder if these systems are just holding us back.” – World Economic Forum

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Source: Institute of Ecolonomics