Forex trading is a lucrative business.
In the past year, it has become the most lucrative sector of the global economy, with more than $5 trillion in total trades.
That’s more than twice as much as in the US or UK.
The trend is now changing.
But that trend could soon change if the world economy collapses in a severe recession, according to a report by the investment bank Pimco.
In its latest forecast, the firm said that global growth will slow to just 1.4 per cent in 2019, below the average pace of growth in the past decade, and that growth in Europe will continue to be slower than the rest of the world.
“We are seeing a significant slowdown in the global growth rate over the next several years, reflecting a more pronounced slowdown in Europe than the US and Japan,” Pimcom’s director of research, David Siegel, told the Financial Times.
“That means that the underlying growth rate of GDP will slow in the years ahead, while the underlying GDP per capita will increase.”
“If that were to happen, the global recovery could be substantially more difficult than the one we are seeing,” he added.
Pimco says that the impact of a global recession would be felt across the financial system.
“[In] a global downturn, the impact could be much worse than in a normal period, as the impact would be much greater than would be expected given the current size of the economy and the size of potential losses,” Siegel said.
Pimcom says that as long as the global economic downturn does not turn into a global depression, there is no reason to expect the impact to slow.
The firm says that it will not be able to predict how the impact on global growth would affect other industries.
For example, Pimca said that there is a risk of a further decline in exports of the services sector, but it would be hard to quantify.
Its forecast of the impact will be published in the next two weeks.