http://www.ibtimes.com/imf-chief-christine-lagarde-warns-mediocre-economic-growth-emerging-markets-1877596
The IMF Chief Christina Lagarde is warning leaders of emerging market nations of a sustained economic slowdown. Six months ago, she warned these leaders about what she called "a new mediocre" which is a slow growth for a long time. But now, she is trying to help prevent this mediocre from becoming their reality. This mediocre growth is not an environment that respects financial stability. She also stated that in some places, growth just doesn't seem to be good enough. Global economic growth last year was 3.4% which was about the average for the past 30 years. The main problem is that the lingering impact of the great recession on top of 50% youth unemployment. The eurozone seems to be improving due to their quantitative easing program which started in January. Emerging and developing countries aren't seeing as bright of a future. Their forecasts are slightly worse than last year. She is recommending combinations of structural reforms to improve productivity, labor force participation, trade policy, and financial policies to help boost investment.
4 comments:
The IMF Chief also mentioned that developing countries should push for greater influence in global economic institutions. But won't structural reforms take a while to change, adapt and wouldn't that take too long for developing countries to enjoy the benefits from IMF? Shouldn't global economic institutions assist rather than advise the developing countries to achieve a structural reform?
I think mediocre economic growth is something that can't really be avoided with the way current economies function. Economies that are service driven have few places to grow as they attempt to reach full employment rather than actually expand.
I agree with Ibs. The current economy is plagued with ebbs and flows. In class we continually discuss the need for strong investment to minimize the cyclical nature of output. Mediocre growth might be unavoidable with the trouble in the Eurozone, China, etc.
Mediocre growth, in this setting, probably can't be readily avoided due to globalized economies operating in a pattern of disjoint cycles: on the one hand, this provides the appearance of stability. On the other, it demonstrates a lack of growth. This is likely due to concerns over major players' structural abilities like China, the EU, and US, in terms of sustained growth and debt.
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