The World Has Changed, the International Monetary System Needs Some Serious Re-Thinking

The international monetary system (IMS) is neither preventing currency volatility … On paper, the IMS has to guarantee – with its institutions, policies and conventions – the orderly functioning of transnational financial flows and exchange-rate regimes. Over the past few years, however, most currencies’ exchange-rates fluctuated at an unprecedented pace, hampering capital transfers and commercial […]

Job Creation: What Can the GCC Learn From Asia?

Asia’s job creation is one of the fastest in the world. Over the past decade, Asia grew rapidly thanks to high rates of savings and investment, human capital accumulation, diversification and knowledge transfers. Most of all, though, it put unskilled labor to work and enjoyed rising productivity. Overall, the informal sector – characterized by low […]

GCC: How to Create Jobs for Nationals?

The GCC is growing, helped by crude production and expansionary policies. Despite the sluggish global outlook, the Eurozone recession, and Asia’s deceleration, the six Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – are growing the fastest in the Middle East and North Africa (MENA) region […]

MENA: No Reforms, No Growth

Middle East and North Africa (MENA): hard choices needed, but unlikely. For political transitions to be successful, economic fundamentals need to be solid. Yet, MENA countries are facing political change and pressing social demands while enduring economic strains. The sluggish global outlook, the Eurozone (EZ) recession, and China’s deceleration hamper exports, remittances and capital inflows. […]

Is This a Lost Decade for Growth?

Five years into the crisis, the world still faces below-potential growth prospects. The subprime crisis started to unfold in the summer of 2007, and burst in a money-market freeze and credit-crunch in the fall of 2008. A global recession ensued. Between 2009 and 2012, massive fiscal and monetary stimuli prevented a depression, by transferring debt […]

Frail Fundamentals, Rising Liquidity: Where to Invest?

The 2012 outlook is fragile, but – in the absence of shocks – most economies will muddle through. Global growth will slow to less than 3 percent. In the developed world, structural issues, modest consumption, political impasse, and fiscal restraint will keep growth below potential. Emerging markets will grow above 5 percent, but below-trend. Yet, financial […]

2012: The Year of Debt Restructuring

Over the next twelve months, expect unsettling developments. The global crisis is still unfolding, and it could escalate. Weakening growth, rising systemic risks, and contagion-prone markets are likely to enhance economic and financial fragility. We are entering a perilous new phase. First, growth will remain below potential, hindered by excessive debt.  Since 2000, total world […]

China Is No Japan

Remember the 1980s? Japan seemed unstoppable: wealthy and dynamic, able to produce better and cheaper products than the rest of the world, it became an export powerhouse and accumulated huge dollar surpluses. For more than a decade, Japan’s real GDP growth persistently surpassed that of the US. The Tokyo stock market set record after record. […]

Asia’s Upcoming Pension Reforms

Asia is growing richer, and older. Economic success and population aging are increasing societal expectations. The development of social protection systems seems inevitable. Over the past three decades, China’s economy grew fifteen-fold. By 2050, India is expected to be the world’s third largest economy. At the same time, declining fertility and increasing survival rates are […]

Recession Risks, Debt-Restructuring Inevitable, Inflation Likely

The ongoing turmoil is not a new, unexpected crisis. It is the 2008 financial crisis entering its critical stage. With governments unable to foot the bill any longer, the markets are acknowledging the ‘elephant-in-the-room’: the still-unresolved debt-overhang is downgrading global growth. Typically, a non-financial crisis brings about a short recession. If supported by fiscal and […]