Friday 11 January 2013
Looking back, Looking Ahead...
While the soothsayers, pontiffs
and religious zealots look on in disbelief at the last few days of 2012,
doomsday as predicted by them apparently seems to have been a misnomer. Our
world still exists physically, although scarred by incidents such as Hurricane Sandy , Typhoon
Bopha , the shootout at the Connecticut children’s school , passing away of
legends like Rajesh Khanna , Yash Chopra , Pandit Ravi Shankar and most recently the passing away of
India’s symbol of “Nirbhaya”. The
global economy has yet to shake off the fallout from the crisis of 2008-2009.
Global growth dropped to almost 3 percent in 2012, which indicates that about a
half a percentage point has been shaved off the long-term trend since the
crisis emerged. This slowing trend is likely continue. Mature economies are
still healing from the scars of the 2008-2009 crisis. But unlike in 2010 and
2011, emerging markets did not pick up the slack in 2012, and are not expected
to do so in 2013 either.
A more significant slowdown is
expected for less mature economies over the next year – and beyond. Overall,
growth in developing and emerging economies is projected to drop from 5.5
percent in 2012 to 4.7 percent in 2013, with growth falling in China from 7.8
to 6.9 percent and in India from 5.5 to 4.7 percent. From 2019-2025 emerging
and developing countries are projected to grow at 3.3 percent. The long-term
global slowdown we project to 2025 will be driven largely by structural
transformations in the emerging economies. As China, India, Brazil, and others
mature from rapid, investment-intensive ‘catch-up’ growth to a more balanced
model, the structural ‘speed limits’ of their economies are likely to decline,
bringing down global growth despite the recovery we expect in advanced economies
after 2013.
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