By Joni Akpederi
First the good news: global growth expected to average 2.9 this year may quicken to 3.6 percent next year, a little better than last year’s 3.2 percent.
And the not-so-good: emerging markets that are pulling the global economy when developed economies wearied out, will not do as well as initially forecast few months ago. They are now projected to post 4.5 percent and 5.1 percent, this year and next, respectively (down 0.5 percent and 0.4 percent).
That is how IMF Economic Counselor Olivier Blanchard delivered the global economic outlook, when he introduced the World Economic Outlook, the seminal publication that presages the direction of the global economy over the short term. The publication itself, captured it all in a terse rider; Transition and tension, signifying the shifting patterns that are bringing advanced economies back into the global driving seat, as they pick up some speed while emerging markets decelerate due to “structural bottlenecks” in infrastructure, labour and investment.
For developing countries, especially in sub-Saharan Africa, the celebration is expected to continue. Commodity prices that have being boosting their economies, and making them some of the world’s fastest growing, are holding up. Moreover, improving governance and micro-economic management is enabling the economies to benefit from sound policies that encourage diversification, resulting in sustaining the development.
Of course, there are downside risks that may make the story less par-pleasing. Current impasse in the U.S over the debt ceiling, if not will handled, can make a mess of the Fund’s projections.
The outlook also assumes that the Japanese economy will continue to respond well to the so-called ‘Abenomics’ which favours, for now, monetary easing and fiscal stimulus.
Even the euro area, bogged down by its peripheral area’s lassitude is expected to start showing signs of recovery by next year, because of European policy makers’ resolve to continue the bailing out of the weakest in their ranks.
Although, growth in China, long the global champion, is projected to ease off a little next year, the 0.25 percent loss of speed will do little damage to global growth. In fact, its decision to shift focus to internal demand for sustainability would ultimately do the world some good as other economies will have more access to world markets, thus helping to balance world trade.
Trouble spots in North Africa and parts of the Middle East are difficult to predict as political upheavals tend to obfuscate the entire picture. Even so, their economies have nowhere but up to go as most of them are now seeking ways to stabilize and re-engage with the international community.