2019 Global Outlook: Another year near zero
It has been a decade since global interest rates reached the zero lower bound, where monetary policymakers lose their ability to stimulate the economy using conventional policy tools. Among the largest global central banks, only the United States Federal Reserve has set its benchmark above 2 percent. Will this anomaly end in 2019?
2019 Global Outlook: The economy we left behind
2018 was not a bad year for the world economy, and 2019 should be only a little worse. Consistent with our forecasts, last year brought no disasters: no recession in the West, no major slump in China, no public finance crisis in Europe or global trade wars. Instead, there was satisfactory growth and a long overdue cleanup on financial markets. 2019 will be more sluggish as China keeps slowing and the U.S. administration spurs commercial tensions. Yet the biggest brake will be applied by the world economy’s silent actor – lagging productivity growth.
German growth sputters: Should Europe brace for trouble?
In 2018, Germany’s growth dipped. Europe’s economic powerhouse is likely to continue sputtering in 2019 and beyond. Too many European companies have become exceedingly dependent on the health of the German economy and relatively few seem capable of restructuring their production and marketing techniques to succeed on a global scale. The German slowdown will soon be followed by other disappointing figures on the continental scale.
Real economies and financial markets: Outlook for 2019
Financial markets are hesitant, as many sources of concern pile up on analysts’ desks. This report argues that the future of the world economy depends on three sets of variables: policymakers’ ability to adjust to the end of generous monetary policies and profligate fiscal practices; their willingness to recognise the need to engage in structural reforms and act accordingly; the possibility that significant shocks occur – such as a crash in China or an all-out trade war.
Opinion: Dilemmas of development aid
Like other areas of public policy, development aid has had its recurrent fads. The pendulum has swung from socialist-style big-push schemes to pro-market reforms and their latest iteration, results-based aid. This micro-oriented approach has recently come under attack for neglecting the wider “macro” environment of states and institutions. Decades after the flaws of the traditional aid model were exposed, economists are still casting about for a better alternative.
The euro and the promise to end monetary profligacy
As the European Central Bank winds down its quantitative easing program, none of its future policy options look especially promising for the euro. While investors would welcome a more neutral monetary stance, that could spur political tensions in the euro area that could roil financial markets. Meanwhile, regulation is on the rise and growth could suffer, with unpleasant consequences for the single currency.
The false end of quantitative easing
In June, the European Central Bank made the fateful announcement that it would phase out its bond-buying program – called quantitative easing, or QE – by the end of this year. But putting an end to net bond purchases is not the same thing as ending the ECB’s ultra-lax monetary policy. By leaving the door open to rolling over its massive balance sheet of bonds as they mature, policymakers could keep oxygenating the euro area’s economy for years to come.