My opinion on the state of the world economy

I'm generally quite pessimistic about the state of the world economy, and prospects over the next few years. To some extent, this is probably because I tend to be a bit pessimistic by nature. I'm an actuary, so I always focus on potential risks, maybe more than I focus on potential rewards.

I'm sure you've all heard about the credit crunch. And you've probably also noticed that interest rates on mortgages have been going up, increasing the amount of money that people have to spend on mortgage payments every month, gas and electricity bills are going up, food inflation has been picking up lately, so lots of essential items seem to be increasing in price. This leaves less money available to spend on non-essential items. At the same time, house prices are falling, making people feel gloomy, and less likely to spend lots of money on the high street. The problem with that is that the less money people spend, the less profits companies make, and when companies do not make profits they try to reduce costs, and they do that by reducing their workforce. And higher unemployment means even less spending, less profits, more unemployment, and it all goes round again.

So I think that the global economy is heading towards recession. I also think that prices for food and energy could continue to increase or stay at high levels for some time to come. The world's population is increasing, putting a strain on the planet's natural resources. We need to increase agricultural production to eat, and extract vast amounts of oil and base metals from the ground to maintain our standard of living.

Now even though I think that all of these things could happen, and in fact I do believe that the next few years are going to be difficult for the world economy, I have great faith in mankind's ability to invent new and ingenious ways to solve any problems that come our way, so I think that we'll somehow manage to get over these problems eventually.