Resilient with question marks
William De Vijlder
Economic adviser to the general management of BNP Paribas, Professor in economics at Ghent University
Whether a glass is half full or half empty depends on who is looking at it and from which angle. On the economic front, recent data and the near-term outlook argue in favour of “half full”.
Growth is resilient in the developed economies and recent releases for the Eurozone have surprised on the upside. Even Japan is looking better. The developing economies have shown some improvement, although the picture is very heterogeneous. The growth slowdown in China has been halted temporarily, in India growth is expected to increase slightly and the outlook for Brazil and Russia has improved with the prospect of leaving the recession behind.
Yet international organisations make a “half empty” assessment. The BIS is concerned about financial market dissonance, the OECD has issued a global growth warning, and last week’s World Economic Outlook from the IMF emphasises a “subdued outlook subject to sizeable uncertainty and downside risks.” Much of this has to do with “looking at the glass” from a different angle, i.e., with a longer term perspective: the slowdown in potential GDP growth and global trade, the too-high rate of unemployment, particularly for the youth, the reduced effectiveness of monetary policy, and high levels of public sector debt that limit policy leeway. In addition, political uncertainties (Brexit, elections) have increased. With the risks and uncertainties having been well identified, it is now up to economic policy to take them on board. For monetary policy, this implies the ECB keeping its hand on the throttle and the Fed touching the brakes, but very gently.
Director en celinfa s.a.
8 年sometimes it is neccessary to see the half full glass because you only live ones
Internal Sales Desk and Product Manager, Personal Retirement Savings at Security Benefit
8 年The glass was filled to the brim and actually overflowing in 1999 and 2007 wasn't it or was I just dreaming? Technology is accelerating the world at such breakneck speed, condensing our attention spans to less than 7 seconds that those two dates appear to us as if they were 1899 and 1907. I agree a balance must be struck between the Cassandra's and Pollyanna's of the world, But, it's pretty clear to me and many others that there is also a need for extreme caution, heightened awareness and reservation in regards to the constant bombardment of bromides that flood out like a waterfall from the business news media, central banks and of course the chief economists, equity strategists and stock analysts at big banks and large asset management companies. There's obvious pecuniary rewards for wearing smiley faces all the time!