Nouriel Roubini, a professor at NYU’s Stern School of Business and CEO of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.
In a sharp departure from this time last year, the global economy is now being buffeted by growing concerns over US President Donald Trump’s trade war, fragile emerging markets, a slowdown in Europe, and other risks. It is safe to say that the period of low volatility and synchronized global growth is behind us.
NEW YORK – How does the current global economic outlook compare to that of a year ago? In 2017, the world economy was undergoing a synchronized expansion, with growth accelerating in both advanced economies and emerging markets.Moreover, despite stronger growth, inflation was tame – if not falling – even in economies like the United States, where goods and labor markets were tightening.
Stronger growth with inflation still below target allowed unconventional monetary policies either to remain in full force, as in the eurozone and Japan, or to be rolled back very gradually, as in the US. The combination of strong growth, low inflation, and easy money implied that market volatility was low. And with the yields on government bonds also very low, investors’ animal spirits were running high, boosting the price of many risky assets. Den Rest des Beitrags lesen »
Andrés Velasco, a former presidential candidate and finance minister of Chile, is the author of numerous books and papers on international economics and development. He has served on the faculty at Harvard, Columbia, and New York Universities.
Andrés Velasco, Project Syndicate
During the last few years, a lively debate has taken place between advocates of economic and political/social explanations of populism. The issue is far from settled, but even if the economic explanation is right, it does not follow that the current global recovery will make much of a political difference.SANTIAGO – Markets, like the pundits meeting in Davos this week, are hopeful: the world economy is well on its way toward a balanced and perhaps sustained recovery. With the economy on the mend, will politics follow suit?
For people who view the surge in populism around the world as an aftershock of the global financial crisis, the answer is yes. As unemployment falls and middle-class incomes begin growing, the populist temptation will wither, or so they hope.
Unlike before the 2011-2012 crisis, the eurozone seems to be locked in a benign credit cycle, in which lower risk premia allow both banks and governments to refinance at lower rates, more credit is available for the real economy, and the resulting recovery increases government revenue. But how long can this cycle persist?
BRUSSELS – During the 2011-2012 euro crisis, the currency area became mired in a “doom loop,” in which weak banks in financially distressed countries rationed credit, causing a recession that intensified pressure on government finances, which were already burdened by the need to cover banks’ losses. But such self-reinforcing spirals can also operate in the opposite direction. Understanding these dynamics may be the key to determining the eurozone’s relative strength today.
In a doom loop, the expectations of default drive up risk premia until the economy reaches the brink of collapse, even if the underlying problems could be managed over time. At a certain point, when the gulf between financial-market pessimism and economic reality becomes too large, the market becomes ready for a reversal. Den Rest des Beitrags lesen »
Having just finished our regular 3-month autumn stay in Greece, it’s a good time to reflect on the impressions I could gather and what may be in store for Greece until we return there next spring. Obviously, the all-important questions are: Has Greece really turned the corner(economically, that is)? Are we perhaps witnessing the beginning of an accelerated turn-around? In short: has the time come to bet on a Greek recovery?
What stands out is that all commentators focus on the macro-side of things: Will Greece successfully exit the program? Will Greece be able to return to markets? Will yields on Greek bonds decline further? Are bank shares rising? Do banks report profits? Etc. Den Rest des Beitrags lesen »
Earnings per share hit new high, underscoring broad economic recovery
Listed companies are at their most profitable on record after a bumper year of earnings growth across global equity markets.
The earnings-per-share of a FactSet index of over 20,000 listed companies from around the world has now reached an average of $9.69, increasing nearly 19% in the last year.
That is the fastest year-over-year rise since 2011, surpassing the late-2014 high of $9.55. While the FactSet data only stretch back to 2001, increased earnings in emerging markets like China, among other factors, mean that the per-share level has likely never been higher. Den Rest des Beitrags lesen »
Date: 16-10-2017
Source: The Wall Street Journal By Simon Nixon
The bloc’s robust recovery is an opportunity to strengthen its resilience to future shocks—but will governments grasp it?
French President Emmanuel Macron, and German Chancellor Angela Merkel have different priorities when it comes to reforming the eurozone’s architecture.
The International Monetary Fund had a clear message for economic policy makers gathered in Washington for its annual meetings last week: don’t waste a recovery. The global economy is enjoying a robust upswing, so governments should fix the roof while the sun is shining.
It was a message directed particularly at the eurozone. The strength of the currency bloc’s recovery has taken almost everyone by surprise, not least the IMF, which upgraded its forecast for eurozone growth in 2018 by 0.2 percentage point to 2.1% compared with its July forecast, putting it on a par with the U.S. This recovery is both broad-based, spanning all countries and sectors, and well-balanced—with household spending, exports and investment all playing their part. Den Rest des Beitrags lesen »
Date: 14-08-2017
Source: The Wall Street Journal By Simon Nixon
Many economists may have underestimated the role of improvements to the supply side of the eurozone economy
It is now four years since the start of the remarkable Spanish economic recovery. Yet at the time, few saw it coming. Back in July 2013, the International Monetary Fund forecast that it would take until 2018 for Spanish economic growth to barely scrape above 1% while unemployment would remain above 25% for five years.
In fact, the Spanish turnaround had already begun: Growth exceeded 1% in 2014 and has been above 3% ever since.In that time, Spain has created more than two million jobs, bringing the unemployment rate down from a peak of 26.2% to an eight-year low of 17.2% today. Den Rest des Beitrags lesen »
Carmen Reinhart is Professor of the International Financial System at Harvard University’s Kennedy School of Government.
AUG 1, 2017 Project Syndicate
CAMBRIDGE – Earlier this year, the consensus view among economists was that the United States would outstrip its advanced-economy rivals. The expected US growth spurt would be driven by the economic stimulus package described in President Donald Trump’s election campaign. But the most notable positive economic news of 2017 among the developed countries has been coming from Europe.
Last week, the International Monetary Fund revised upward its growth projections for the eurozone, with the more favorable outlook extending broadly across member countries and including the Big Four: Germany, France, Italy, and Spain. IMF Chief Economist Maurice Obstfeld characterized recent developments in the global economy as a “firming recovery.” Growth is also expected to pick up in Asia’s advanced economies, including Japan. Den Rest des Beitrags lesen »
Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.
AUG 1, 2017 Project Syndicate
MILAN – In the summer, as life slows down, there is space to reflect on fundamental issues. One of the key puzzles occupying my mind of late is the disconnect between widespread political dysfunction and relatively strong economic and financial-market performance.
Today, the world’s major economies are experiencing a steady recovery, despite the occasional setback. To be sure, economic performance is far from reaching its full potential:depending on where one looks, one can find output gaps, excess leverage, fragile balance sheets, under-investment, and unfunded longer-term non-debt liabilities. Still, financial markets show no signs of convulsion, even as monetary stimulus is gradually withdrawn.
Yet, at the same time, political conditions seem to be deteriorating. Polarization has intensified, owing partly to growing resistance to globalization and the unbalanced growth patterns that have resulted from it. In the United States, for example, the Pew Research Center reports that people not only disagree vehemently with their compatriots on the other side of the aisle; they also don’t like or respect them. Den Rest des Beitrags lesen »
Philippe Legrain, a former economic adviser to the president of the European Commission, is a visiting senior fellow at the London School of Economics’ European Institute and the author of European Spring: Why Our Economies and Politics are in a Mess – and How to Put Them Right.
JUL 28, 2017 Project Syndicate
LONDON – So far this year, the crisis-prone European Union has fared better than expected. Economic growth has picked up, unemployment continues to fall, and troubled Spanish and Italian banks have been resolved without sparking a panic.
Things are looking up politically, too. Europhobic populists were defeated in the Dutch and French elections earlier this year, and have lost momentum ahead of Germany’s national election in September. And, contrary to earlier fears, the political upheavals of 2016 seem to have boosted popular support for the EU, at least for now.
Britain’s decision last June to withdraw from the EU has plunged the country into turmoil, making an exit from the Union seem less appealing to other discontented Europeans. In addition, the Brexit negotiations have underscored the costs and complexities of leaving the bloc, and have rallied the remaining 27 EU governments around a common cause. The same can be said of US President Donald Trump, against whom Europeans are increasingly united. Den Rest des Beitrags lesen »
NEW YORK – How does the current global economic outlook compare to that of a year ago? In 2017, the world economy was undergoing a synchronized expansion, with growth accelerating in both advanced economies and emerging markets. Moreover, despite stronger growth, inflation was tame – if not falling – even in economies like the United States, where goods and labor markets were tightening.