The Global Economy ... Revisited
A week ago I gave you a brief presentation of the outlook for the global economy based on a range of blogposts and articles. My post primarily dealt with US slowdown, global imbalances and whether the Eurozone could take up the slack from US as we go forward. This discussion is obviously very interesting and although nothing changes in a week I still feel like I omitted something, at least if we want the big picture here. In this post I have three sources for you on the global economy and they tell also tell an important part of the story.
First off is the Global Economic Outlook from The IMF. Actually the major points of this report was filtered through the press some weeks ago (and also in my previous post) but now it is here in its full version. I leave it to you to find and read what you find interesting but for my part the following points are worth thinking about ...
The Patterns and Rise of Asia's economies (Chapter 3); get summary here.
'Asia’s remarkable growth has been driven by high investment and rapid productivity increases—both supported by the region’s strong policy environment. Sustaining rapid growth will require meeting a number of key challenges:
- Implementing reforms to boost productivity growth in increasingly important
- Providing policy support for continuing the shift of resources from agriculture to
industry and services.
- Strengthening policy frameworks in late-developing countries.'
The Boom in Commodity Prices - will/can it last? (Chapter 5); get summary here.
'- Metal prices have increased sharply due to strong demand, particularly from
China which has contributed 50 percent to the increase in world consumption of
the main metals in recent years, which has outstripped the supply response.
- Contrary to popular wisdom, speculation appears to have had a limited impact
on commodity prices.
- Looking ahead, IMF analysis suggests that metal prices will decline
progressively from current levels as new production capacity comes on stream.'
The next report comes from the Financial Times who have devoted a section on their site to the questions pertaining to the issues of the global economy. Most of it are behind the firewall so I can't say much of the quality of the content but it looks solid at short glance. Particularly the idea of Asia taking center stage in steering global economic growth as we go forward is one to watch.
'Asia’s prosperity and dynamism could not have been predicted in the aftermath of the second world war. All Asian countries were poor. Some had been destroyed by the fighting while others had never advanced. Asian incomes in 1950 were only 10 per cent of US levels.
Latin America, by contrast, seemed to be a better bet for development. Incomes in southern America were a quarter of US levels in 1950, the region had many natural resources and it was close to the North American economic powerhouse.'
Lastly we have the latest print edition of the Economist which features a survey of the global economy and like with the FT above the focus is on the emergence of Asia as a new global economic presence.
(From the first article - non-walled content!)
'Last year the combined output of emerging economies reached an important milestone: it accounted for more than half of total world GDP (measured at purchasing-power parity). This means that the rich countries no longer dominate the global economy. The developing countries also have a far greater influence on the performance of the rich economies than is generally realised. Emerging economies are driving global growth and having a big impact on developed countries' inflation, interest rates, wages and profits. As these newcomers become more integrated into the global economy and their incomes catch up with the rich countries, they will provide the biggest boost to the world economy since the industrial revolution.
Indeed, it is likely to be the biggest stimulus in history, because the industrial revolution fully involved only one-third of the world's population. By contrast, this new revolution covers most of the globe, so the economic gains—as well as the adjustment pains—will be far bigger. As developing countries and the former Soviet block have embraced market-friendly economic reforms and opened their borders to trade and investment, more countries are industrialising and participating in the global economy than ever before. This survey will map out the many ways in which these economic newcomers are affecting the developed world. As it happens, their influence helps to explain a whole host of puzzling economic developments, such as the record share of profits in national income, sluggish growth in real wages, high oil prices alongside low inflation, low global interest rates and America's vast current-account deficit.'
So there you go ... a quick (more or less that is) look at the global economy and the major trends to watch out for as we go along.