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In early 2016, the Economist Intelligence Unit released a breakdown of their analysis of the biggest threats to the global economy.
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One of the top threats was actually the possible election of Donald Trump as president.
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They predict that his opposition to free trade
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and criticism of China and Mexico, which are massive trade partners, poses significant risk to the economy.
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But Trump is only sixth on the list, so we wanted to know
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what are the world’s biggest economic threats?
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Well, the health of the economy is crucial to stability around the world.
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Several leading threats are centered around the European Union.
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The EIU notes that Greece’s ongoing debt crisis might be stemmed by the latest austerity measures and bailout.
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The risk of Greece refusing to abide by the restrictions however, and eventually leaving the EU could
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create a world of trouble for the international markets.
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This “Grexit” is especially feared because it would destabilize the surrounding countries
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leading to the third biggest threat: a breakup of the EU.
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In recent years, the EU has been struggling to maintain cohesion.
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With more than a million migrants arriving in Europe, a continued recession following the 2008 global banking crisis,
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and terror attacks in Paris, and Brussel. The EU is in trouble.
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Many parties calling for a breakup of the EU, or stricter borders in the “free travel Schengen zone”. This idea have been seeing increased popularity.
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Even the United Kingdom is gearing up for a referendum to leave the European Union
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sparking fears that other countries may follow.
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A breakup of the EU would be disastrous for a huge number of trade agreements and established economic treaties.
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This could possibly plunge Europe into an even deeper financial crisis, thus destabilizing global markets.
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The second biggest threat to the economy isn’t actually economic at all.
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Russia’s military intervention in Syria and the annexation of Crimea has many worried about a new Cold War
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between The US and Russia. This competitive political fight complicates a number of existing
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organizations like NATO and the G7, and implies an increase in defense spending on all sides.
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This takes away from goals like fighting ISIS and global warming
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and could easily destabilize the world economy.
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But according to the EIU, the single biggest threat to the global economy is China.
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China has been growing at a massive and rapid pace, but in recent years the level of growth has
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been called clearly unsustainable. Despite efforts to manipulate their currency and markets,
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the renminbi currency is still relatively weak, and their economy has a huge amount
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of unrecoverable debt. China’s role as a manufacturing and commodity trading leader
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means that a slump for them is a slump for consumers and businesses worldwide.
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Although there are a lot of things to be afraid of, the EU, China, and Russia pose the biggest threats to the stability of the global economy.
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What’s worse is that all of these scenarios are ranked highly because they are also the most likely to occur.
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By comparison, a Trump presidency is only rated as “moderately probable”.
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But if the EU falls apart, China’s economy keeps dropping, and a new Cold War emerges,
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Trump may just be the least of anyone’s problems.
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