The U.S. and world economies are slowing down

The world economy is on track to grow less this year than last year, according to the latest forecast from the Organization for Economic Cooperation and Development (OECD).

IMF Cuts 2014 Global Forecast After Slowdowns in China, U.S.

The International Monetary Fund lowered its outlook for global growth this year as expansions weaken from China to the U.S. and military conflicts raise the risk of a surge in oil prices.

Global economy weekahead: Looking for more green shoots

LONDON: A raft of business surveys this week will be combed over for confirmation of hopes that a dire fourth quarter of 2012 marked the cyclical trough for the world economy.

World Trade Organisation's new boss will face an in-tray filled with problems

At an elegant 1920s building set in a lush park on the shore of Lake Geneva this month, nine senior global politicians – six men and three women – will be attending an extraordinary job interview.

Japan says economy's condition stable, but weak

TOKYO: Japan's economic condition stopped worsening, the outgoing government said on Friday in a monthly report, but it remains weak enough to justify a nudge from monetary and fiscal stimulus planned by the newly elected administration.

IMF needs to do more to detect global financial risk: Report

WASHINGTON: The International Monetary Fund must do more to quantify financial risks around the world and monitor how each country's policies impact its neighbors, IMF staff said on Tuesday.

China's Economy May Be Turning The Corner

China’s economy may be turning the corner, according to the just released China HSBC Flash Manufacturing Index (PMI), which rose to 13-month high of 50.4 in November.

Euro on brink of collapse: IMF

LONDON: The crisis-hit euro is teetering on the brink of collapse, the International Monetary Fund (IMF) has said.

US exempts Japan and EU nations from Iran oil sanctions

The US government will not impose sanctions on Japan and 10 European Union nations that have reduced their oil imports from Iran.

Global Growth Slows to 3.9% as O’Neill Sees Aging Labor in BRICs

Jan. 3 (Bloomberg) -- A year ago, Catherine Liu employed more than 2,000 people at her five Shanghai luggage-making factories. Now, as the dwindling supply of low-paid young workers forces wages and costs higher, she has 1,200 left.

Stocks, Commodities Advance on Europe Outlook, U.S. Retail Sales

Nov. 28 (Bloomberg) -- Global stocks rose for the first time in 11 days and commodities and the euro advanced as European leaders drafted a framework for the region’s bail-out fund and America’s Thanksgiving retail sales jumped to a record. Treasuries declined.

Cameron: 'Moment of danger' for global economy

David Cameron has said the world economy is at "a moment of danger" as a result of the eurozone crisis.

He told BBC political editor Nick Robinson there were "serious clouds on the horizon" and it was "absolutely vital" to stabilise the euro.

After that was done, he said, there must be "more on the growth front" in the UK to get the economy moving.

Global economic crisis threatens UK, says Balls

The UK economy faces a lost decade of economic stagnation due to the ‘deepening crisis’ in the world economy, shadow chancellor Ed Balls warned the Labour Party conference today.

He called on the government to implement a five-point plan to boost demand in the economy, including reversing January’s VAT rise and bringing forward more infrastructure development.

Can Global Economic Policy Be Freed From Its Paralysis?

The Bank for International Settlements in Switzerland has just published its annual report, and it is a dour document. The BIS (as it’s known) was created in 1930 to handle post-World War I reparation payments from Germany to Britain and France. The Great Depression ended reparations, and now the BIS provides—among other things—sober commentary on the global economy. Its latest report oozes foreboding.

Keynes the key to maintaining Australia's economic health

The government's swift adoption of Keynsian policies protected the nation during the GFC. Now it is time to finish the job and bring in a surplus.

TWO and a half years ago, the fall of Lehman Brothers triggered the global financial crisis and sharemarket collapse that pushed the world economy to the brink of utter catastrophe. Australia's swift policy response saved tens of thousands of jobs, countless business failures, and a level of individual misery and hardship that can never be known. Today, despite the hammer blows of recent natural disasters, our economic outlook is strong and we are in a better position than almost any of our peers.

South Africa Into BRICs: Shifting Global Economic Balance Away From Developed Countries? – Analysis

In January Chinese President Hu Jintao formally invited South African President Jacob Zuma to attend the third BRIC leaders’ summit to be held in China in mid April 2011, thus taking the number of BRIC nation to five (Brazil, Russia, India, China and South Africa). South Africa had applied and lobbied to join the BRIC at the G20 meeting of the world’s leading economies in Seoul in November 2010. The acronym, BRIC was coined by Jim O’Neill an economist with the Goldman Sachs in a paper entitled “The World Needs Better Economic BRICs” published in 2001. Yet in another paper Dominic et. al. (2003), again from Goldman Sachs argue that over the next 50 years, the BRICs could become a much larger force in the world economy and could be larger than the G6 in US dollar terms.

India can be global economic leader in the 21st century: US

India could lead the world economy in this 21st century if it continues to take additional measures on economic reforms and opens up more sectors to the overseas players, according to the US commerce secretary Gary Locke. He also said that if India would further follow the road of reforming, and if it continues to become more open to the investments as well as the innovations of foreign companies, then it stands a much better chance of being the leader of the world economy in this century. Gary Locke was in Mumbai on Thursday when he said all this.

Additionally, he brought up the concerns regarding reciprocity in business among the two nations, and the necessity to do away with cross-border restrictions, adding that India was still being ranked low on ease of doing trade because of such barriers.

DAVOS-Lobster in the mountains, riots on the Nile

The global elite, dining on Norwegian lobster and reindeer at the end of the World Economic Forum on Saturday, felt pretty chipper despite growing concerns about the inequality of the economic recovery.

While they believe the global financial and euro zone debt crises are abating, the real world intruded with a different and much more acute crisis in Egypt that made their debates about inequality and food security less theoretical than anticipated.

This year's four-day talkfest in the Swiss mountain resort of Davos was a fragmented affair.

The issue expected to dominate discussion, the euro zone debt crisis, turned out to be a relatively damp squib, with a growing consensus among bankers and policymakers that a resolution of the issue may be near.

If there was one common strand in Davos this year it was growing divisions -- whether between fast-growing emerging markets and sluggish developed world economies, or between rich and poor within countries.

As residents in Cairo and Alexandria counted the cost of a further night of clashes between protesters and police on Saturday, politicians and business leaders urged Egyptian President Hosni Mubarak to start a dialogue with his people.

The corporate world is nervous.

Egypt has, after all, been one of the darlings of African and Middle Eastern investors, and the world is stepping into unknown territory with the rapid spread of unrest from country to country, propelled by the Internet and mobile technology.

LESSON OF EGYPT

"The lesson from Egypt is clear: people will no longer accept oppression, particularly when oppression is married with rising food prices, a lack of employment and the destruction of hope for a young generation," Sharan Burrow, general secretary of the International Trade Union Confederation, told Reuters.

Yet the mood among 2,500 business leaders and policy-makers in Davos was still predominantly positive, albeit tempered with caution after the worst economic slump in 75 years.

"Compared to last year and the year before, there is certainly much greater confidence about stability, more optimism about the global economic outlook," said the International Monetary Fund's first deputy managing director John Lipsky.

For many CEOs and bankers, there is simply the reassurance of having put yet another year's distance between themselves and the collapse of Lehman Brothers in 2008, which brought the world economy to the brink.

As a result, the panicky mood evident at the last two annual meetings in Davos has evaporated and business bosses are starting to look again at spending the trillions of dollars of cash sitting on their balance sheets.

"It is quite obvious that the mood has changed. Everybody is much calmer," said Swedish Finance Minister Anders Borg.

"You see it in the meetings, without people speaking on their telephones or leaving the room or having to stand in the corner, having very difficult conversations."

As ever, this year's Davos was an eclectic mix, covering everything from macroeconomics to geopolitics to management theory to science.

But there was no single, dominant theme -- and Adair Turner, chairman of Britain's Financial Services Authority, reckons that, perhaps, is the most encouraging sign of all.

"It is a thoroughly good thing because when the world gets gripped by one big theme it usually either means there's a big disaster or else people are getting in the grip of some new irrational exuberance," he said.

Source: http://www.reuters.com

Forecasting trouble

SAMUEL GOLDWYN is one of several people believed to have said, “never make forecasts, especially about the future”. Daniel Altman, an American academic economist who once worked for The Economist, blithely ignores this advice in his new book. Indeed, he offers no fewer than 12 big predictions for what he calls the “deep factors” that will most affect the future of the world economy.

This is a bold exercise and, albeit fitfully, an interesting one. The author rightly complains that too much forecasting, not just in economics, is short-termist, looking a year or two ahead at most. It also tends to be linear: too often forecasters merely project forward recent trends. It is also clear that people tend to overestimate the immediate impact of new developments but underestimate their longer-term effects.

Mr Altman writes with some verve, yet he makes only a partially convincing case in support of his predictions. He is best on purely economic ones. Thus he is surely right to argue that China’s seemingly inexorable growth will slow, though it is less clear that China may, like Japan before it, then slip back. He is also persuasive in maintaining that the rich world’s policies on immigration (taking in the brightest and best) and the environment (transferring polluting industries abroad) will damage the poorest countries.

But he is on weaker ground in many of his broader forecasts. The suggestion that the future, like the past, will belong to the middleman may suit his view of America as the world’s salesman, but it sits ill with many other signs of disintermediation. The argument that a motley group of “lifestyle hubs”, including Bulgaria and even Tunisia of all places, will take over from the likes of London, New York and Paris as the favoured bases for the rich and successful seems fanciful.

Mr Altman is also cavalier in forecasting the demise of several of the world’s international institutions. In truth, it takes a lot to overcome natural inertia and kill any organisation. Predictions that the European Union will disintegrate economically and that the World Trade Organisation will also collapse give too little weight to the value placed on these bodies by their present and prospective members. Several countries in eastern and south-eastern Europe are eager to join the EU and even the euro; and Russia is not the only country aspiring to get into the WTO. How effective these organisations will be may be debatable, but it seems decidedly premature to write their obituaries.

Overall, the tone of Mr Altman’s book is strikingly gloomy about the future, except oddly for that of his own country. In the longer-term perspective that he favours, the gloom seems excessive. In a 1930 essay on “Economic Possibilities for our Grandchildren”, John Maynard Keynes mused on a future 100 years thence, when much of humanity would have solved the perpetual economic problem of subsistence. At least in rich countries, that future is likely to be realised, as Keynes predicted, by about 2030. Keynes’s vision of a cultural and intellectual paradise may have been naive. But Mr Altman would do well, perhaps in a second edition, to explore not just potential problems but also the effects of undreamed-of levels of prosperity, at least in Europe and America.

Source: www.economist.com

India’s stature in global system

In the year that went by, India’s foreign policy has been largely dictated by its effort to secure more partners around the world. Especially in the Asian continent, evident from the regularity of high-level diplomatic visits. It has been New Delhi’s intent to create a zone of friendship around. With the phenomenal rise of neighbouring China with which India has not had the best of relations, the Manmohan Singh Government has been serious about increasing India’s foothold.
As the world takes baby steps toward securing the still fragile global economic recovery, the importance of countries like India has undoubtedly risen. In the changed circumstances, the salience of groups like the G20 of which India is a primary member, have dramatically increased. Moreover, the country’s economic performance and the opportunities in store for any country to do business with India have increasingly attracted attention.
Significantly, it is in this context, that the visit from the leaders of all the five permanent members of the UN Security Council assumes importance. The Russian President Medvedev’s recent visit completed a full circle. His visit followed that of Britain’s David Cameron, the US President Barack Obama, France’s Nicolas Sarkozy and China’s Premier Wen Jiabao.
Apart from the symbolic importance, all the leaders who came calling in 2010 were men on a mission. They meant business and concluded their visits conversing on a host of issues concerning both sides and re-assessing the relations besides inking a lot of agreements spanning a lot of areas.
Among the P-5 members, India has had the most complex and difficult relationship with its neighbour and rising power China. The two countries share a protracted border dispute and do not see eye to eye on a number of vital issues, including the culpability of Pakistan for heightened anti-India terrorism.
But, this does not take away the kind of traction that India has been able to gain in its relationship with the major powers in the elite club of the Security Council. Apart from China, all the other four countries in the P-5 including the US which had been dilly-dallying has come out strongly in favour of a permanent seat for India in an expanded Security Council in the future.
China has maintained a rehearsed and rather lame assurance. The most that Beijing continues to say and one that was repeated in the joint communique recently is, “China attaches great importance to India's status in international affairs as a large developing country, understands and supports India's aspiration to play a greater role in the United Nations, including in the Security Council.”
But, New Delhi should not be hugely concerned about this because it also emphasizes Beijing’s insecurity of a rising India. Besides, the issue is not something that will pay immediate dividends. It serves like a secure investment that paves the way for understanding in a number of other strategic issues.
The fact that Britain, France, Russia and the US support India’s aspirations for a permanent seat does not mean that the reform would happen in the near future. However, it surely gives the message that for these countries, New Delhi is a responsible international player and the presence of India in the club would not be a liability for them.
In the field of civilian nuclear energy, India has come out quite a winner. The exception again is the Chinese side that concentrates on doing nuclear business with Pakistan, a country with a shoddy non-proliferation record. Wherein its own nuclear scientist AQ Khan was exposed as a czar of the nuclear black market.
Otherwise, major countries, including erstwhile skeptics have come around to either signing or at the least discussing the possibility of cooperating with New Delhi in the field of civilian nuclear energy. Nuclear commerce with India is the buzz in the international system and the niche and cooperation that follows it should be used as a launching pad for extending cooperation in other areas.
In fact, the India-US ‘123’ agreement really served as the ignition, which combined with the Nuclear Suppliers Group waiver (NSG) led to the windfall. France came out as one of the earliest and strongest supporters of India joining international nuclear commerce. The synergy between Russia as a major energy producing country and India as a major energy consuming country is the catchphrase for India-Russia cooperation in this field. Indeed the results are encouraging.
Undoubtedly, as expected, the Nuclear Liability Bill has raised some concerns among foreign countries hoping to invest in India’s nuclear energy market. The good part is that countries wishing to do business with India have not taken strong positions against the Bill. This gives New Delhi some space to negotiate as to how its domestic concerns can be balanced with the demands of international nuclear commerce. This issue has to be worked out in a graduated manner that will not hamper the vital interests of any side.
Also, as the issue of terrorism becomes ubiquitous in all bilateral and multilateral, New Delhi, intends to make other major power acknowledge the seriousness of this threat in the Indian context. Whereby, we saw a general pattern where the burgeoning economic partnership between India and China did not translate in optimistic gestures on other issues of core interest.
Apart from the Chinese Premier, other leaders of the P-5 including President Obama were quite categorical in their condemnation of the existence of safe havens across the border. True, be it Britain, France, Russia or the US, there will be differences and opposing viewpoints on many issues, expected in any broad-based relationship, but at this juncture there seems to be no conflict of interest on any core issue.
But, on the Chinese front, there are some hardcore issues that could seriously impede the relationship. Adding to the inevitable competition between the two rising powers in the same geographic region, China through the stapled visa issue has continuously poked at the question of India’s sovereignty.
This time around, India took the right move towards a restraint aggression by diverting from the norm and not making any reference to Chinese sovereignty on Tibet and the ‘One China' policy, so dear to Chinese ears. The burgeoning economic relationship between New Delhi and Beijing is often flaunted as the hallmark of ties but in this department too, all the huge bilateral trade figures are nothing more than a chimera until the trade imbalance is not corrected.
So, as 2010 came to an end and India’s stature in the international system became more cemented than ever, its ties with the major powers of the world increased in some substantial areas. But as a country that aspires to sit at the high table of diplomacy and make its viewpoints counted in international decision-making, India should be more pro-active in its foreign policy making.
The milestones achieved last year should serve as launch pads toward substantial engagements in the years ahead. And an opportunity to better assess the loopholes that could hinder India’s ambitions in the future.
Monish Tourangbam, INFA

Source: http://www.centralchronicle.com