Major emerging-market economies around the world are slowing, for reasons both shared and unique. Hardest to understand, though, is why India, where annual GDP growth has fallen by five percentage points since 2010, is underperforming so much relative to its potential.
Europe’s woes are worse than previously believed and could have long term repercussions for the global economy. As a result, developing countries should strengthen their domestic fundamentals by re-emphasising medium-term development strategies, said the World Bank.
Despite the rebound in economic activity in the first four months of this year, the recent resurgence of tensions in the eurozone is a timely reminder that the aftershocks of the 2008/09 financial crisis have not played out fully and that volatility and uncertainty are here to stay.
When the truth is unimaginable, human psychology finds an alternative reality in which to dwell. That describes the global situation today, when the entire planet seems to be in denial about what is about to occur in the eurozone.
India could be the first BRIC nation to lose its investment grade, said credit ratings agency Standards and Poor who cited disappointing growth, policy paralysis and corruption as the main risk factors.
In the report Will India be the First BRIC Fallen Angel, S&P said the Indian government’s reaction to potentially slower growth and greater vulnerability to economic shocks will largely determine whether the Asia’s third largest economy remains within the investment band, or becomes the first “fallen angel” of the BRIC nations.
Growing inequality in the U.S. is not only killing the economy, but it threatens to undermine the nation’s values and identity. America today can no longer regard itself as the land of opportunity that it once was, with equality of opportunity less evident than in Europe.
It looks set to be an important week for meetings and events, especially for the oil industry. The OPEC meets in Vienna and releases its monthly oil market report this week, while BP publishes its annual statistical review of world energy markets.
Monday, June 11
Though six factors now suggest that US economy is slowly and steadily healing, a lot more needs to happen – indeed, urgently – to restore America’s traditional vigour and vitality.
NEWPORT BEACH – Six internal factors suggest that the United States’ economy is slowly healing. For some observers, these factors were deemed sufficient to form the critical mass needed to propel the economy into escape velocity.
Fed Reserve Chairman Ben Bernanke has signalled that the American central bank is prepared to take any necessary steps required to protect the US economy if the European crisis deepens.
Bernanke told Congress that Europe poses “significant risks” to the US economy, adding that US economic recovery is not guaranteed. He said Fed officials need to monitor economic trends and data closely, including key indicators such as job creation.
Chinese companies tripled their investment in Europe to $10 billion and that figure is expected to reach $500 billion by 2020. According to a report released yesterday, outbound global investments could hit $2 trillion by 2020.
As the European debt crisis extends into its fourth year, Chinese firms are increasing their investments into European companies as a way of acquiring new skills and technology as well as gaining access to new markets.
The global financial system is in desperate need of reform. But in the absence of international consensus on some key points, any reforms will be greatly weakened, if not aborted. Is there a single, coherent approach to resolving the problem?
HONG KONG – Nowadays there is ample evidence that financial systems, whether in Asia in the 1990’s or a decade later in the United States and Europe, are vulnerable to breakdowns. The cost in interrupted growth and unemployment has been intolerably large.
