...GLOBAL PROSPECTS AND THEIR LIKELY IMPACT ON SOUTH AFRICA INDEX: Table of Contents Global prospects and their likely impact on South Africa 1 INDEX: 1 Strength of the Recovery 2 Developed Countries: 2 Emerging Markets: 2 Risks to the Global Economy 3 Exit Strategy from Policy Stimulus 4 Repair and reform of the financial sector 4 Fiscal Crises and underinvestment in Infrastructure 4 Socio and Political Implications of Unemployment and Private Demand 5 Asset Price Collapse and the risk appetite of investors 5 Return to Previous Growth Path or Not 5 Will the current crises be “DÉJÀ VU ‘” for the world wide economy? 6 Fundamental Changes in Origins & Nature of Economic Activity 6 Global warming / Climate Change: 7 Population Growth: 7 Power shift to the east: 7 Innovation: 7 Economic Activity: 7 Impact of Global Crisis on South Africa’s Growth Outlook 8 Conclusion 8 BIBLIOGRAPHY: 10 STRENGTH OF THE RECOVERY All of the world’s high-income countries returned to positive real GDP growth during the fourth quarter of 2009 and the Economist Intelligence Unit’s forecasts for 2010 indicate a return to marginally below the growth trajectory that was achieved prior to the recession. Developed Countries: UNITED STATES Economic recovery in the US has been remarkably strong, with fourth quarter real GDP growth of almost 6% suggesting the presence of a “V”-shaped trend. Further, news emanating from recently published official data includes a recovery of private...
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...Summary Since the OECD’s first Economic Survey of China in 2005, China has continued to expand rapidly. The economy is also weathering the global crisis remarkably well, not least thanks to prompt and vigorous macroeconomic policy action. Economic expansion is projected to continue over the medium run, and China’s share in the world economy is set to grow further. Despite the recent decline in the current account surplus, some imbalances remain, notably an overly high national saving rate, but ongoing reforms can be expected to help alleviate them over time. Structural reform has continued on a broad front in recent years, with an increasing focus on the need for social cohesion. Even so, efforts are under way or still needed in a number of areas to sustain improvements in living standards over the longer run. Further upgrading the monetary policy framework. China’s monetary policy framework has gradually become more market-based, with money growth as the main intermediate target. Going forward, it will need to place less emphasis on quantity-based liquidity controls and more on interest rate changes. Allowing greater exchange rate flexibility and putting more weight on an inflation objective would offer greater scope to tailor monetary policy to domestic macroeconomic conditions. Continuing financial market opening. Chinese financial institutions are now generally stronger and better...
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...International Trade ECO201: Macroeconomics Tiffany Rice Argosy University According to the USDC (2013), the trade balance between China and the United States for the most recent five year period is: i. 2015 - negative 365,694.5 million dollars ii. 2014 – negative 343,078.8 million dollars iii. 2013 – negative 318,713.2 million dollars iv. 2012 – negative 315, 102.5 million dollars v. 2011 – negative 295,249.7 million dollars (USDC, 2013). According to Colander (2008), foreign trade between two countries can impact many things among each country such as income, prices, interest rates and trade policies. The U.S. and China appear to have used one of the two approaches in the exchange rate system regarding currency of their nations, known as the flexible exchange rate. The flexible exchange rate is a type of exchange rate that is determined by the market rather than the government and is freely allowed to go whichever way it likes to determine an equilibrium value, which is impacted by supply and demand of currency (Colander, 2008). The reason I believe that a flexible exchange rate was used between the U.S. and China is because of the various differentiating amounts of the trade balance between these two countries. The balance of payments is a summary that contains records of financial transactions. There are two types of transactions that are recorded in the balance of payments, which include the current account and the...
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...C.H.I.N.A.: ‘Cheap House Is Not Allowed’ Will China’s real estate bubble burst? Since the onset of the global financial crisis in 2007, China has faced some critical problems linked with the excess of liquidity in its internal market, due to the stimulus plan launched by the Government to soften the effects of the crisis. As a result China is now fighting against a high rate of inflation (especially food prices) and a high cost of property. While the inflation issue has been partially solved in the first term of this year, the fear for the real-estate market trend is still alive. This essay aims to critically analyse the real estate market in China, which is also strictly linked with the health of this country’s economy, by examining this issue from two different perspectives: from the point of view of those scholars who believe that the Chinese bubble will burst and from the point of view of those who believe that the Chinese market is still safe. First of all the essay will give the historical and economic background of the price rises in the Chinese real estate market, from the birth of this important economic sector to the global financial crisis. Secondly, in the core part, this paper will explain the main theory regarding the possibility of the real estate bubble burst and the counter argument. To better understand the actual situation in China there will be also a short comparison with the burst of the American bubble in 2007. In the conclusive paragraph some...
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...prospects for economic growth, especially in the developed countries. As unemployment remains high, at nearly 9 per cent, and incomes stagnate, the recovery is stalling in the short run owing to the lack of aggregate demand. But, as more and more workers are out of a job for a long period, especially young workers, medium-term growth prospects will also suffer because of the detrimental effect on workers’ skills and experience. The rapidly cooling economy has been both a cause and an effect of the sovereign debt crisis in the euro area, and of fiscal problems elsewhere. The sovereign debt crises in a number of European countries worsened further in 2011 and aggravated weaknesses in the banking sector. Even bold steps by the Governments of the euro area countries to reach an orderly sovereign debt workout for Greece have been met with continued financial market turbulence and heightened concerns of debt default in some of the larger economies in the euro zone, Italy in particular. The fiscal austerity measures taken in response are further weakening growth and employment prospects, making fiscal adjustment and the repair of financial sector balance sheets all the more challenging. The United States economy is also facing persistent high...
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...jumped up to second place with a nominal GDP of USD 9.2 trillion. Since the introduction of the economic reforms in 1978, China has become the world’s manufacturing hub, where the secondary sector (comprising industry and construction) represented the largest share of GDP. However, in recent years, China’s modernization propelled the tertiary sector and, in 2013, it became the largest category of GDP with a share of 46.1%, while the secondary sector still accounted for a sizeable 45.0% of the country’s total output. Meanwhile, the primary sector’s weight in GDP has shrunk dramatically since the country opened to the world. China weathered the global economic crisis better than most other countries. In November 2008, the State Council unveiled a CNY 4.0 trillion (USD 585 billion) stimulus package in an attempt to shield the country from the worst effects of the financial crisis. The massive stimulus program fueled economic growth mostly through massive investment projects, which triggered concerns that the country could have been building up asset bubbles, overinvestment and excess capacity in some industries. Given the solid fiscal position of the government, the stimulus measures did not...
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...Secular Stagnation: Facts, Causes and Cures Edited by Coen Teulings and Richard Baldwin CEPR Press a A VoxEU.org Book Secular Stagnation: Facts, Causes, and Cures A VoxEU.org eBook Centre for Economic Policy Research (CEPR) Centre for Economic Policy Research 3rd Floor 77 Bastwick Street London, EC1V 3PZ UK Tel: +44 (0)20 7183 8801 Email: cepr@cepr.org Web: www.cepr.org ISBN: 978-1-907142-77-2 © CEPR Press, 2014 Secular Stagnation: Facts, Causes, and Cures A VoxEU.org eBook edited by Coen Teulings and Richard Baldwin CEPR Press abcde Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research (CEPR) is a network of almost 900 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Executive Committee of the Centre does not give prior...
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...Macroeconomics assignment On ANALYSIS OF INDIA CHINA BRAZIL ECONOMIES INTRODUCTION The BIC Countries: Brazil, India, China. The BIC countries are made up of Brazil, India and China - although if we were to categorize them by importance, it would actually be CIB. Why the BIC are Important?? The BIC are both the fastest growing and largest emerging markets economies. They account for almost three billion people, or just under half of the total population of the world. In recent times, the BIC have also contributed to the majority of world GDP growth. According to various economists’ projections, it is only a matter of time before China becomes the biggest economy in the world - sometime between 2030 and 2050 seems the consensus. In fact, Goldman Sachs believes that by 2050 these will be the most important economies, relegating the US to fifth place. By 2020, all of the BIC should be in the top 10 largest economies of the world. The undisputed heavyweight, though, will be China, also the largest the creditor in the world. Apart from their growth characteristics, the BIC countries frankly have little in common. They are primarily an investment category now, although there may some political and economic alliances that develop from that grouping. If they do, it is likely to be temporary - once China has assumed its rightful place, it may have no need for these alliances. A G2 of China and the US may be more important for it unless the 2050 predictions do come true...
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...datWorld Bank Office, Beijing www.worldbank.org.cn www.worldbank.org/china CHINA QUARTERLY UPDATE SUSTAINING GROWTH April 2012 The China Quarterly Update reviews recent economic developments in China, updates the economic outlook and lays out key policy challenges. This issue was produced by Philip Schellekens (task team leader) and Xiaoli Wan, in collaboration with Xiaofan Liu, Philip O’Keefe, Dewen Wang and Min Zhao, and under the overall guidance of Klaus Rohland, Sudhir Shetty, Bert Hofman and Ardo Hansson. Comments are gratefully acknowledged from country economists in the East Asia and Pacific Poverty Reduction and Economic Management Unit. The team would also like to thank Jianqing Chen, Tianshu Chen, Li Li, Li Ouyang and Yan Wang for support in the production and dissemination of this report. The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views of the Executive Directors of the World Bank or governments they represent. This report takes into account information available up to end of March 2012. Questions and feedback can be addressed to Philip Schellekens (pschellekens@worldbank.org). EXECUTIVE SUMMARY RECENT ECONOMIC DEVELOPMENTS The Chinese economy is in the midst of a gradual slowdown. A weaker global economic environment and tighter domestic policies combined to slow GDP growth from 10.4 percent in 2010 to 9.2 percent in 2011. Slow growth in the Euro area and sluggish recovery in the US limited...
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...financial management during the credit crunch because a business is supposed to remain successfully even during crisis times. The managers in businesses involved in the international trade have had to make decisions to help their organizations stay afloat during the financial crisis. Economists are of the opinion that a financial crisis results from feeble economic fundamentals for instance, fiscal deficit, reduced foreign reserve and increased foreign debt among others. The financial crisis eased in 2009 but its effects were felt globally. The effects on the international trade occur because of the trade links among countries at the global market through a contagious effect (Glick & Rose, 1999). The contagious effect means that when a financial crisis occurs in a country it creates a crisis in another country even if that other country has sound economic fundamentals. The financial crisis affects international trade greatly and this paper will focus on the effects of a financial crisis on the international trade and barriers around the world. Effects of financial crisis Macroeconomic...
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...KUALA LUMPUR: Lee Soon Seng Plastic Industries Sdn Bhd, which manufactures thermo-formed plastic packaging and extrusion sheets, has seen its new product introduced this year gaining popularity in the Australian, New Zealand and European markets. The product, AIR-TIGHT disposable food containers - ensure that biscuits or cookies remain crunchy for days. It can also store liquids without any spillage. So far, the company has developed over 10 designs of the products which are made of polyenthylene terephthalate, an environmentally-friendly material. Lee Soon Seng's managing director, Datuk Seri Lee Hock Seng, said the company had perfected the thermo press-form technology after a one-year trial and error before going for mass production. "In this technology, the accuracy of moulding is very important to ensure absolute air-tightness. Basically, the containers are tailor-made to suit our clients' needs. "The air-tight property has added value to the products. Although air ventilation is still needed for certain food items such as vegetables and fruits, air-tight containers still have vast uses in the food industry and we foresee a sharp rise in the demand for this new range of products," he told Business Times recently. Lee Soon Seng is wholly owned by SCGM Bhd, a public-listed investment holding firm. For the financial year ended April 30 2013, SCGM posted RM96.9 millions revenue compared with RM82.1 million in 2012. Net profit saw a jump from RM5.9 million to RM7.8 million...
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...Executive summary In this empirical report, we have analyze the characteristics of several important economics indicators and how they can be use by economist to look out for period of inflation, sharp changes in GDP growth due to GST and oil shock and how to make use of this indicators to do a projection on the economy performance. We also come to understand how different types of economic indicators are used and how they correspond to the movement economy activities. Understanding the characteristic of these economic indicators, allows us to identify the cyclical nature of each individual indicator with economic growth and, thus, help us in choosing a set of economic indicators for forecasting the economic performance. To conclude, we state that by doing an economic indicator analysis through leading, coincident and lagging indexes, we can understand how well the economy performance as a whole. It also tells us the relationship between economy performance and the policy-making of a country. Introduction The measurement and analysis of business cycles has been one of the important research topics in economics and underlying theories of these economics arguments have changed as times goes by. In this empirical report, attention will be focus into the central questions on the causes of fluctuation in the economic activity by constructing a business cycle analysis and composite coincident index, a combination of several time series that one would expect to contain...
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...IMF STAFF POSITION NOTE December 22, 2009 SPN/09/29 Global Imbalances: In Midstream? Olivier Blanchard and Gian Maria Milesi-Ferretti I N T E R N A T I O N A L M O N E T A R Y F U N D INTERNATIONAL MONETARY FUND Research Department Global Imbalances: In Midstream? Prepared by Olivier Blanchard and Gian Maria Milesi-Ferretti1 Authorized for Distribution by Olivier Blanchard December 22, 2009 Disclaimer: The views expressed herein are those of the author(s) and should not be attributed to the IMF, its Executive Board, or its management. Before the crisis, there were strong arguments for reducing global imbalances. As a result of the crisis, there have been significant changes in saving and investment patterns across the world and imbalances have narrowed considerably. Does this mean that imbalances are a problem of the past? Hardly. The paper argues that there is an urgent need to implement policy changes to address the remaining domestic and international distortions that are a key cause of imbalances. Failure to do so could result in the world economy being stuck in “midstream,” threatening the sustainability of the recovery. JEL Classification Numbers: E21, E22, F32, F33, F36, F41 Keywords: Current account deficits, saving, investment, portfolio choice. Authors’ E-mail Addresses: oblanchard@imf.org ; gmilesiferretti@imf.org 1 One of the series of “Seoul papers” on current macro and financial issues. We are grateful to Caroline Atkinson...
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...ricing Analysis of the Impact of High Oil Prices on the Global Economy International Energy Agency May 2004 IEA/(2004) SUMMARY Oil prices still matter to the health of the world economy. Higher oil prices since 1999 – partly the result of OPEC supply-management policies – contributed to the global economic downturn in 2000-2001 and are dampening the current cyclical upturn: world GDP growth may have been at least half a percentage point higher in the last two or three years had prices remained at mid-2001 levels. Fears of OPEC supply cuts, political tensions in Venezuela and tight stocks have driven up international crude oil and product prices even further in recent weeks. By March 2004, crude prices were well over $10 per barrel higher than three years before. Current market conditions are more unstable than normal, in part because of geopolitical uncertainties and because tight product markets – notably for gasoline in the United States – are reinforcing upward pressures on crude prices. Higher prices are contributing to stubbornly high levels of unemployment and exacerbating budget-deficit problems in many OECD and other oil-importing countries. The vulnerability of oil-importing countries to higher oil prices varies markedly depending on the degree to which they are net importers and the oil intensity of their economies. According to the results of a quantitative exercise carried out by the IEA in collaboration with the OECD Economics Department...
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...World Economic and Financial Sur veys Regional Economic Outlook Middle East and Central Asia 09 I N T E R N A T I O N A L M O N E T A R Y M AY F U N D W o r l d E c o n o m i c a n d F in a n c i a l S u r v e y s Regional Economic Outlook Middle East and Central Asia •••••••••••••••••••••• 09 I N T E R N A T I O N A L M O N E T A R Y F MAY U N D ©2009 International Monetary Fund Cataloging-in-Publication Data Regional economic outlook : Middle East and Central Asia. – [Washington, D.C.] : International Monetary Fund, 2009. p. ; cm. – (World economic and financial surveys, 0258-7440) ISBN 978-1-58906-842-1 “MAY09.” Includes bibliographical references. 1. Economic forecasting – Middle East. 2. Economic forecasting – Asia, Central. 3. Middle East – Economic conditions. 4. Middle East – Economic conditions – Statistics. 5. Asia, Central – Economic conditions. 6. Asia, Central – Economic conditions – Statistics. I. International Monetary Fund. II. Series: World economic and financial surveys. HC415.15.R445 2009 Please send orders to: International Monetary Fund, Publication Services 700 19th St. N.W., Washington, D.C. 20431, U.S.A. Tel.: (202) 623-7430 Fax: (202) 623-7201 E-mail: publications@imf.org Internet: www.imfbookstore.org The views expressed in this publication are those of the contributors...
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