Friday, October 11, 2013

Global economy growth projections

The mood among analysts looking into 2014 ,is not that much optimistic about the prospect for global growth. The IMF report (October 8th, 2013) is cautious on its projections for 2013 (2,9%), and 2014(3,9%). Besides, it warns about the implications of shifting the growth sources from emerging economies, to advanced ones.- Emerging economies, although with a strong growth performance,(4,5% for 2013 ,and 5,1% in 2014) it is expected to become weaker as the round of easing monetary policies, is about to begin its normalization. Besides , there are other structural constraints such as infrastructure, labor markets rigidities, and lack of investment , which set the boundaries for potential growth for those economies. Latin America economies look not that bad. Brazil is expected to growth flat at 2,5% rate both 2013 and 2014, well below its partners of the BRIC groups .Mexico instead , will growth 1,2% in 2013 but picking up in 2014 (3,2%) .- Statistics are one thing, economic –political analysis is another. All of those projections will probably be revisited as long as the US monetary policy start its normalization path,(assuming by the way it also solves the current stand off about debt ceiling and budget ). In other words, those projections evaluations should consider the risks surrounding any 2014 growth forecast. In fact ,IMF officials have made clear this issue, warning that global economy will face in 2014 a transition period to both different financial conditions and different sources of growth. Other analysts, (, have warned about the Euro Zone chances of keeping on its current recovery mode without solving key issues .- Thus, what is left out of those projections?. The global economy ,is still on its way out of the worst recession so far in this century. It will go on to match its long term growth potential, as long as policy makers deal properly with the requirements associated with it: keeping the pace of reforms, both in the euro zone and emerging economies.