Borderless Knowledge Lecture: is a Global Economic Crisis Approaching?

Stock market indices are declining. Considered as the economic engine of Europe, German industry and exports are slowing down. Investment advisors are calling for caution, and according to some economics specialists’ declaration in the press, the market will collapse within a year. 

Is the situation really this serious?  Is a new global economic crisis approaching? How would it affect our everyday lives? Do EU funds boost the Hungarian economy?

The latest event of the "Borderless Knowledge" lecture series discussed these questions. The event featured lectures by University Professor Laszlo Csaba at CEU’s Department of International Relations and by economist Eva Palocz, who is the CEO of Kopint-Tárki Institute for Economic Research. During the second half of the event they were joined by Akos Deliaga, Managing Director and Co-Founder of Talk-a-Bot, for a roundtable discussion. 

In the first lecture Laszlo Csaba explained why he expects a serious crisis in the world economy soon, and pointed out that central banks around the world seem to be of the same opinion. Experts at the National Bank of Hungary have admitted in their studies published by the institution that the “Hungarian model” of economic development is no longer working. A new model is needed for economic growth, where more money is spent on education and innovation.

Also, Professor Csaba pointed out that most central banks, including the European Central Bank, are following loose monetary policies in order to stimulate economic growth, which suggests that they expect an economic downturn.

 

“Whatever happens in the financial world will have a direct effect on the real economy, jobs, salaries, career opportunities” he warned of consequences. “We need to talk about the crisis before the tram runs over us, before we get that high fever” he said, so that the effects of the crisis on the people will be smaller. 

Eva Palocz is more optimistic: she expects a recession in the next few years, but she does not see signs of an earthquake-like crisis. By presenting economic data between 1900 and 2016, she identified two crises in the past 120 years: the one in 1929-32 and 2008-2010. According to her, these were the serious “earthquakes.” She does not count other periods of recession among crises.   

"Will there be a crisis or a recession? We don’t know" Palocz said, explaining that she sees no signs of a big crisis approaching the global economy. "In a real, big crisis the banking sector collapses, banks do not give credit to one another or other companies, companies do not deliver to each other," and sooner or later everything breaks down. The fabric of the economy breaks apart, Palocz explained.

In the framework of the Borderless Knowledge open lecture series CEU professors, leading Hungarian experts and well-known public figures, discuss exciting recent scientific findings and their direct impact on our everyday lives. All lectures are held in Hungarian, with simultaneous English translation provided.

Previous lectures discussed the topics of global warming, networks and research on childhood cognitive development.