? quo vadis ? world ? economy alex izurietaun / desa ideas 10 th anniversary conference
TRANSCRIPT
? Quo vadis? world ? economy
Alex Izurieta UN / DESA
IDEAs 10th Anniversary Conference
Problems persists after the ‘great recession”
Uneven global income distribution, overborrowing and underconsumption
Private sector balance sheet stress
Unfettered financial institutions Pressure on fiscal budgets
(‘crowding out or baling out’?) Inadequate aggregate demand Pressure on natural resources
and the environment
A ‘muddling through’ option
Sluggish growth in developed economies (financial fragility, deleveraging, impotent monetary policy, un-welcomed fiscal policy)
Major emerging economies in a moderating pace, vulnerable to international trade and finance, not yet fully regionalized
Other developing countries pending on an export recovery (of commodities)
‘Muddling through’: a ‘technical’ growth
scenario
-10.0-7.5-5.0-2.50.02.55.07.5
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 95 00 05 10 15 20
USA
-10.0-7.5-5.0-2.50.02.55.07.5
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 95 00 05 10 15 20
Europe
-10.0-7.5-5.0-2.50.02.55.07.5
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 95 00 05 10 15 20
Japan Oth Dev & H Inc Asia
-10.0-7.5-5.0-2.50.02.55.07.5
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 95 00 05 10 15 20
China India & Oth Dng Asia
-10.0-7.5-5.0-2.50.02.55.07.5
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 95 00 05 10 15 20
CIS & West Asia
-10.0-7.5-5.0-2.50.02.55.07.5
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 95 00 05 10 15 20
Dng America & Africa
Baseline: economic growth (per cent)
‘Muddling through’: convergence slow and
partial
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
90 95 00 05 10 15 20
WorldUSA and EuropJapan Oth Dev & H Inc AsiaChina India & Oth Dng AsiaCIS & West AsiaDng America & Africa
Baseline: income per capita ($2005 pp)
‘Muddling through’: employment: problem
for all
50556065707580
50
55
60
65
70
75
80
90 00 10 20
USA
50556065707580
50
55
60
65
70
75
80
90 00 10 20
Europe
50556065707580
50
55
60
65
70
75
80
90 00 10 20
Japan Oth Dev & H Inc Asia
50556065707580
50
55
60
65
70
75
80
90 00 10 20
China India & Oth Dng Asia
50556065707580
50
55
60
65
70
75
80
90 00 10 20
CIS & West Asia
50556065707580
50
55
60
65
70
75
80
90 00 10 20
Dng America & Africa
Baseline: employment rate (% of work. pop.)
‘Muddling through’: imbalances take on
again
-6-5-4-3-2-101
-6
-5
-4
-3
-2
-1
0
1
90 00 10 20
USA
-2.4
-1.6
-0.8
0.0
0.8
1.6
-2.4
-2.0
-1.6
-1.2
-0.8
-0.4
0.0
0.4
0.8
1.2
1.6
90 00 10 20
Europe
0.00.51.01.52.02.53.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
90 00 10 20
Japan Oth Dev & H Inc Asia
-2
0
2
4
6
-2
-1
0
1
2
3
4
5
6
90 00 10 20
Middle Income
-7
-5
-3
-1
1
-7
-6
-5
-4
-3
-2
-1
0
1
90 00 10 20
Low Income
Baseline: current account (% of GDP)
The ‘muddling through’ option will not likely stand
Vulnerable and fragile Unsatisfactory outcomes call
for some kind of action The louder voice in the
developed world calls for ‘fiscal austerity’ and hopes of export recovery
The developing world between perplexity and hope of ‘decoupling’
A ‘fiscal austerity’ scenario:
weaker demand & protracted
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7 .5
-5 .0
-2 .5
0 .0
2 .5
5 .0
7 .5
10.0
90 00 10 20
USA
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7 .5
-5 .0
-2 .5
0 .0
2 .5
5 .0
7 .5
10.0
90 00 10 20
Europe
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7 .5
-5 .0
-2 .5
0 .0
2 .5
5 .0
7 .5
10.0
90 00 10 20
Japan Oth Dev & H Inc Asia
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7 .5
-5 .0
-2 .5
0 .0
2 .5
5 .0
7 .5
10.0
90 00 10 20
China India & Oth Dng Asia
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7 .5
-5 .0
-2 .5
0 .0
2 .5
5 .0
7 .5
10.0
90 00 10 20
CIS & West Asia
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7 .5
-5 .0
-2 .5
0 .0
2 .5
5 .0
7 .5
10.0
90 00 10 20
baselinefiscal austerity
Dng America & Africa
Economic growth (per cent)
A ‘fiscal austerity’ scenario:
employment far worse
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
USA
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
Europe
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
Japan Oth Dev & H Inc Asia
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
China India & Oth Dng Asia
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
CIS & West Asia
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
baselinefiscal austerity
Dng America & Africa
Employment rate (% of work. pop.)
A ‘fiscal austerity’ scenario:
employment far worse
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
USA
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
Europe
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
Japan Oth Dev & H Inc Asia
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
China India & Oth Dng Asia
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
CIS & West Asia
50
55
60
65
70
75
50
55
60
65
70
75
90 00 10 20
baselinefiscal austerity
Dng America & Africa
Employment rate (% of work. pop.)
A ‘fiscal austerity’ scenario:
shifting external imbalances
-6-5-4-3-2-101
-6
-5
-4
-3
-2
-1
0
1
90 00 10 20
USA
-3-2-101234
-3
-2
-1
0
1
2
3
4
90 00 10 20
Europe
0.0
0.8
1.6
2.4
3.2
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
90 00 10 20
Japan Oth Dev & H Inc Asia
-4
-2
0
2
4
6
-4
-2
0
2
4
6
90 00 10 20
Middle Income
-7
-5
-3
-1
1
-7
-6
-5
-4
-3
-2
-1
0
1
90 00 10 20
baselinefiscal austerity
Low Income
Current account (% of GDP)
A coordinated ‘employment growth’ scenario
Stronger stimuli, targeted to jobs, to greener technologies, and to private investment
Internationally coordinated to avert speculative attacks and protectionist responses, aimed at correcting imbalances
Effective debt-work out initiatives Development oriented
(infrastructure, know how, market access, etc.)
The ‘employment growth’ scenario
growth delivers
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 00 10 20
USA
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 00 10 20
Europe
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 00 10 20
Japan Oth Dev & H Inc Asia
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 00 10 20
China India & Oth Dng Asia
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 00 10 20
CIS & West Asia
-10.0
-5.0
0.0
5.0
10.0
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
90 00 10 20
baselineemployment grow th scenario
Dng America & Africa
Economic grow th (per cent)
The ‘employment growth’ scenario
employment catches up faster
50556065707580
50
55
60
65
70
75
80
90 00 10 20
USA
50556065707580
50
55
60
65
70
75
80
90 00 10 20
Europe
50556065707580
50
55
60
65
70
75
80
90 00 10 20
Japan Oth Dev & H Inc Asia
50556065707580
50
55
60
65
70
75
80
90 00 10 20
China India & Oth Dng Asia
50556065707580
50
55
60
65
70
75
80
90 00 10 20
CIS & West Asia
50556065707580
50
55
60
65
70
75
80
90 00 10 20
baselineemployment growth scenario
Dng America & Africa
Employment rate (% of work. pop.)
The ‘employment growth’ scenario
external imbalances improve
-6-5-4-3-2-101
-6
-5
-4
-3
-2
-1
0
1
90 00 10 20
USA
-2.4
-1.6
-0.8
0.0
0.8
1.6
-2.4
-2.0
-1.6
-1.2
-0.8
-0.4
0.0
0.4
0.8
1.2
1.6
90 00 10 20
Europe
0.00.51.01.52.02.53.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
90 00 10 20
Japan Oth Dev & H Inc Asia
-2
0
2
4
6
-2
-1
0
1
2
3
4
5
6
90 00 10 20
Middle Income
-7
-5
-3
-1
1
-7
-6
-5
-4
-3
-2
-1
0
1
90 00 10 20
baselineemployment growth scenario
Low Income
Current account (% of GDP)
Conclusion: what lies ahead for the next 10 years?
At the trough of the recent recession, attention to policy action and international coordination grew, winning the policy debate
But stimuli were inadequate A sluggish recovery is changing the
ground, likely bringing back the world economy to a new recession
Genuine alternatives are feasible, but these must persuade, hopefully before a deeper crisis