Risk Levels Still in the Red

How tenuous is our hold on economic stability in the West? First, the U.S. Congressional Budget Office reported that the economy could relapse into a recession if President Obama and Congress remain at an impasse and allow several big tax increases and spending cuts to take effect at the start of 2013. Second, Greece may yet fail as its political leadership may have lost the domestic credibility to carry out any promises it makes to its eurozone partners and the IMF. Third, any sustained global instability could have dire consequences in the BRICSA countries, but especially China. There, GDP growth is still forecast at more than 7.5 per cent, down from its earlier torrid pace but still ensuring plenty of demand. Slowdowns in the U.S. or EU could have serious implications for China. Each factor carries its own risk universe of implications. We’re not out of the woods yet.

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