ECONOMY: MACROECONOMIC POLICY
Revitalising growth
through strategic policies
G lobal growth prospects are decidedly mixed and anaemic by historical standards. While the United States seems headed towards a soft landing, the Chinese economy faces enormous headwinds, and Europe and Japan remain sluggish. Aside from India, there are not many emerging market bright spots. On the plus side, the profound impacts of the pandemic are increasingly behind us, inflation is coming down in the US and Europe, and the US Federal Reserve and European Central Bank are cutting interest rates. These positive developments are taking place amid significant downside risks. economic uncertainty and geopolitical tensions, and the pressing challenge of climate change. G20 members must unite at the Rio Summit to create effective measures The world needs more than lofty rhetoric to spur growth amid
Geopolitical tensions such as Russia’s barbaric war against Ukraine and US-China tensions are rife, putting the brakes on interdependence. Populism, isolationism and nationalism are on the rise. Global economic openness is, to some degree, fragmenting. Excessive global imbalances are returning. China’s manufacturing trade surplus is 10% of the country’s gross domestic product. Germany’s habitually excessive current account surplus is climbing. Meanwhile, the dollar is strong, and the US and Europe are concerned about Chinese ‘overcapacity’ spilling into global markets. This is a recipe for increased protectionism. G20 demographic developments and ageing will depress potential growth. Increased public investment could help boost needed climate and infrastructure spending, laying a foundation for stronger sustainable growth. But high fiscal debt and deficits in advanced economies often constrain public investment. European country debts – notably in France, Italy and the United Kingdom – are generally high, and Germany is needlessly shackling itself with a return to its inflexible debt brake, despite promises to increase military spending, meet infrastructure demands and boost
Mark Sobel , ƈÎė°ěŲ×ƈjýÎě°īƈ Monetary °ĸÙƈ8ěĸ°ĸÎě°īƈ Institutions Forum
96
G20 BRAZIL: THE RIO SUMMIT — 2024
globalgovernanceproject.org
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