Tags: citigroup | global | economy | slump

Citigroup Warns Global Economy More Vulnerable to US Slump

dominoes falling on american currency spread
(Dollar Photo Club)

Wednesday, 27 February 2019 09:21 AM EST

A sudden slowdown in the U.S. economy would infect global growth and the impact would be bigger than before the financial crisis, according to Citigroup Inc.

Two weeks after counterparts at Goldman Sachs Group Inc. warned the U.S. was vulnerable to a slowdown elsewhere, economists led by Catherine Mann said there is historically a large correlation of about 70 percent between U.S. growth and the performance of 25 other economies. That’s in part because the U.S. accounts for almost a quarter of global gross domestic product and 10 percent of worldwide trade flows.

The upshot is that a 1 percentage point decline in U.S. expansion would lower the rest of the world’s growth by a similar amount over one year, Citi said. Argentina, Mexico, Taiwan and Canada are deemed the most exposed to a U.S. slump.

The study also discovered that the U.S.’s influence over growth elsewhere has increased since the global financial crisis. The impact of an American slowdown in the quarter after the shock has gone up to about 0.5 percentage point from 0.3 point prior the the turmoil of a decade ago.

This could reflect the fact that the U.S. expansion has been stronger than that of the euro area and perhaps also because of increased capital flows from the U.S. to emerging markets.

© Copyright 2024 Bloomberg News. All rights reserved.


StreetTalk
A sudden slowdown in the U.S. economy would infect global growth and the impact would be bigger than before the financial crisis, according to Citigroup Inc.
citigroup, global, economy, slump
217
2019-21-27
Wednesday, 27 February 2019 09:21 AM
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