IMF: Economic Outlook
Some out there were waiting on the International Monetary Fund’s new World Economic Outlook report to be issued today. Some were waiting. Most didn’t care, since it was going to contain a tissue of inter-woven statements that probably say what we have already been thinking (at least we could have hoped that they might be that honest) about the dire straits of the world economy.
Apparently we are told that the world recovery is strengthening. Although in the face of figures that clearly show contradictory belief to that, with China’s economic growth slowing decidedly this year, below the forecasts that are being targeted by the Chinese administration. Some are predicting as low as 7.3% for growth this year. Others (World Bank) that are more optimistic believe that China will have a growth prospect of 7.6% (rather than previously-believed 7.7%).
Christine Lagarde already stated last week that the global economy was on track for “sub-par growth” for years to come, warning that the world could fall into the “low-growth trap”. She went on to speak of the EU’s situation: “A potentially prolonged period of low inflation can suppress demand and output, and suppress growth and jobs.” She spoke of “policy ambition” to get the world moving again. But, there is only one type of ambition in the world today. That’s to get the lion share of the market, forgetting that we trade today with others and that eras of isolated economic boom, just can’t happen.
The US is tapering and seems little worried as to the state of the finances or the economies of the emerging markets or the Federal Reserve’s effect on the rest of the global economy, just as long as the Dollar comes back to the good old US of A. Greater cooperation of policymakers never existed in the past and certainly is unlikely to exist today. But, there will one day be a regurgitation of the problem caused, in overt insouciance, and it will be vomited in the face of the US economy.
The IMF Outlook Summary:
• “Recovery is strengthening”.
• 3.6% 2014 in the world.
• 3.9% for 2015, up from 3.0% in 2013.
• Advanced economies: 2.2% in 2014, up from 1.3% in 2013. “Substantial improvement”.
• “Recovery that was starting to take hold is becoming stronger and broader”.
• “Investors are feeling less worried about sustainability”.
• “Far from full recovery”.
• Recovery is strongest in the USA: growth for 2014 forecast at 2.8%.
• UK and Germany – imbalances still exist - 2.9% for former and 1.7% for latter
• Japan: 1.4% growth in 2014 and “fiscal stimulus has played a large role”.
• Eurozone – for the 1st time in 2 years, southern countries have positive growth. “Exports are strong, internal demand is weak. Must become stronger if it is to be sustained”.
• Emerging economies: “will continue to have strong growth”. 4.9% across the board, up from 4.7% in 2013.
• Growth for China of 7.5% this year is forecast.
• India is 5.4%.
• South Africa growth of 5.4%.
• “Bumps can be expected”.
• “Acute risks have decreased, but they have not disappeared”.
• Adjustment and recovery in southern Europe cannot be taken for granted, especially in the context of the deflation fears.
• Geo-political risks have increased.
• “Potential growth is very low in advanced economies”.
• “Measures to increase growth are more important today: increased competition in productivity, rethinking the size of government, examining the role of public investment.
• "Potential growth in emerging economies is also decreasing”.
• “Rising inequalities are present and a central issue today. Until recently they had little implication for macro-economic developments”. But, this is clearly not the case. “They will be art of our agenda for a long time to come”.
Today, the world has reached its economic end, governed by the pitiless, over-bearing few and masses and yet that still remains weak. There’s not enough of the lion’s share to go around anymore and society just mirrors what we are witnessing in the world economy. There are a few that are down-treading the many. The wealthy have the most and the many have nothing or very little to rejoice for. It’s the same in the global economy. The USA, China and the EU are battling it out today to get the biggest part of the pie, preferably with the cherry on top and the dollop of cream. Those that are the many are just scrabbling around to peck at the crumbs that are left. There’s no longer a tide, let alone a rising tide. There are very few boats that haven’t already capsized or that are having difficulty navigating. This is not the thirty glorious years, but the succession of events that have caused a chain-reaction of bubbles bursting, markets inflating and deflating at double-quick digital speed and debt after debt after debt.
What the leaders, the economists, the World Bank, the International Monetary Fund haven’t realized is that when the few becomes so restricted that it’s getting smaller and smaller and there’s only a handful left, then it’s time for collapse to occur. Society regenerates into something else and so will the world economy. But, the power of the economy is concentrated in fewer and fewer hands, so much so, that the time is nearing when it must end.
Originally posted: IMF: Economic Outlook
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