This post is a summary of four articles. The first with the title above was published in April 2015 at http://www.imf.org/external/pubs/ft/survey/so/2015/NEW041615A.htm. The second was published in March 2014 at http://www.economist.com/news/americas/21599782-instead-crises-past-mediocre-growth-big-riskunless-productivity-rises-life. The third was published at http://www.focus-economics.com/regions/latin-america. The fourth was published athttp://www.delivering-tomorrow.com/why-global-connectedness-matters/
Current growth in the global economy is simply not good enough to reduce high unemployment, bolster middle-class income, and drive poverty reduction, IMF Director Christine Lagarde said. Speaking at a conference ahead of the 2015 IMF, World Bank Spring Meetings in Washington, she said a better future depend on lifting today's growth, lifting tomorrow's growth, and working together. Lagarde noted that the IMF's forecasts project the global economy to grow this year at 3.5%, about the same rate as last year, and at 3.8% next year. "So the good news is that the global recovery continues. The not-so-good news is that growth remains moderate and uneven. Participants at the Spring Meetings would be discussing how to prevent this 'new mediocre' becoming the 'new reality', she stated. Policymakers could start by lifting today's growth, measures should include: 1) A package of demand-support policies that is tailored to specific situations and includes accomodative monetary policy where is needed, and smart fiscal policies. 2) Addressing financial stability risks emanating from super-low interest rates, volatile commodity prices and exchange rates, and the potential rise in U.S. short-term interest rates. 3) Stronger financial policies to tackle financial risks that are rising, from banks to the nonbank sector, and from sovereign solvency to market liquidity. "Lifting today's growth is not enough, we also need to lift the rate at which economies can grow over the medium term. Potential growth rates are going down, and this is in part because of changing demographics, lower productivity and, in some countries, the legacy of the crisis," she stated. Reversing this trend means making serious structural reforms that encompass markets, infrastructure, trade, and investment in people. Implementing these reforms will call for strong leadership, she said.
Blessed with high-grade ores and cheap ene, Peru's output of copper, already the world's third largest, will more than double in the next three years, thanks to the opening of several low-cost mines. But rather than make a new dawn, this burst of investment comes at the twilight of the great commodity boom occasioned by the industrialisation of China and India. By providing an unprecedented boost to the region's terms of trade, this handed many Latin America countries a bounteous decade. No longer. Commodity prices are down by a quarter from their level of 2011, with prices of minerals failing by more than those of foodstuffs. After growing by an average of 4.3% in 2004-2011, the region's economies managed just 2.6% last year. Even peru, along with Panama the region's star economy of the past decade, felt the colf draft: it expanded at 5% in 2013, down from an average of 7% since 2005. The picture is more nuanced. Latin America saved and invested more than in the past (though less than other parts of the world did). The World Bank's economist for L.A. points out that the investment rate in the region, at almost 25% of GDP, has at last caught up with that in South-East Asia (though Brazil, at 18%, is a laggard). Some countries have been less responsible than others. Venezuela, with a fiscal deficit of 12.5% of GDP last year, is paying the price of squandering its oil windfall. Argentina is moving towards more orthodox policies, and may just avoid disaster. Having used fiscal stimulus to counteract the 2009 crisis, some governments, notably Brazil, were slow to tighten again. More than economic instability, the worry for L.A. is low growth, the risk that 3% has become the new norm. Latin America must look more to productivity to boost GDP. Productivity has improved a bit, but still lags behind Asia. Although Latin Americans have more education than in the past, international tests show that they still do not learn enough in school. There are also a relative lack of innovation, poor transpot nerworks and a lack of competition.
Latin America's performance was disappointing in the first quarter. It is expected to have contracted 0.2% in the first three months of the year. This is despite the fact that most economies in the region continued on a healthy, albeit slower growth path in first quarter. Argentina, Brazil and Venezuela, largest members of the Mercosur Bloc, are expected to have contracted, causing the region's economic deterioration. The U.S. economy, which experienced a healthy recovery in 2014, also decelerated in the first quarter, although the slowdown is likely temporary as it was caused by harch weather conditions. Latin America's largest economy has deteriorated drastically in recent years and barely managed to eke out growth in 2014. Brazil's economy is expected to worse this year as the austerity measures will dampen private consumption in the near-term and business confidence remains at record low.
Globalization is crucial for economic growth. It has lifted millions of people out of poverty. Citizens of globalized countries enjoy access to a wider variety of goods and services, lower prices and more and better-paying jobs. Globalized countries maintain a competitive edge, and their populations enjoy more prosperity. Europe offers an important example of how cross-border integration spurs economic development. Five years into the global crisis, however, some might argue that the risk of globalization outweight the benefits. There is a convincing evidence to the contrary. The Global Connectedness Index (GCI) concludes that every country has untapped possibilities to benefit from more connectedness, and the potential gains reach trillions of dollars. While the economic dimension of globalization tends to dominate debate, it is important to remember that a globalized world is also about advances in human development: in education, for example. Cross-border flows of information and people, manifest themselves in greater understanding among nations. Shared information enables innovation, and more cooperation often leads to less conflict. Education equality is strongly linked to employability.
