A senior and well known economist has predicted that the pace of global economic growth in te next decade will be about half of what the global economy had achieved in the 2010s.
Simon Baptist, chief economist at the Economist Intelligence Unit (EIU) indicated a change in patterns of growth as well as the fact that one should not take growth itself to be for granted, even while acknowledging that there are signs of a slowdown already in the global economy.
In a recent estimate, its estimation for global growth for 2019 was reduced to 3 per cent by the International Monetary Fund (IMF) which was the lowest forecast made by the global agency in this regards since the global financial meltdown in 2008/09. The major reason or this downgrade was the ongoing trade war between the United States and China.
Countries like Greece, Iran and Libya are among about a dozen or so countries that have recorded a lower rate of growth in their real GDP over the past ten years compared top what they had managed to achieve in the previous decade at the starting of 2000s. other countries such as Ukraine and Italy managed to have flat growth in the same comparable period.
Countries and economies will also have to take into account a slowing Chinese economy while making projections Baptist suggested in a note to investors on Friday.
“I expect that growth will be roughly half as fast in the 2020s as it was in the 2010s. The fastest-growing countries will be in Africa (although not Nigeria) and south and south-east Asia, with Bangladesh, Kenya and the Philippines all looking at a strong decade,” he said.
Growth rates close to zero would potentially be clocked by those countries that have the fastest rate for ageing and declining populations, such as Japan, Italy and Portugal. On the other hand, there can be increased demand for care needs and other difficulties such as strengthening currencies for emerging markets like China, Russia and Thailand that have a more broader aging problem in their demographics.
Additionally, the rising rate of literacy and the lowering of costs of communication revolutionizing the political landscape in emerging markets, continuation of political instability was identified as another of the trends for the future of global economy by Baptist.
“As this week’s protests over anti-Muslim laws in India show, the policies that result from these shifts in communication do not always facilitate well-being or growth,” he said.
A “sustained divergence” between the US and China is another key development the EIU anticipates. It predicted that the differences between the two largest economies of the world would be so intractable that it he consequences would be far greater than the bruising 18-month trade war between the US and China.
“Both sides will be putting companies and other countries into uncomfortable positions as a result,” Baptist concluded.
(Adapted from CNBC.com)