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Lo que no nos mata nos hace mas fuertes (What does not kill us makes us stronger)

The Emerging View

18 March 2016

David Lipton of the IMF recently warned that the global economy is at a ‘delicate juncture’ and that policy-makers need to take urgent action to respond to slowing growth. Mr Lipton could have been more precise; specifically it is developed economies that find themselves in a growth pickle. Using recent growth and trade data, this Emerging View shows that the only part of the global economy to have slowed structurally relative to its long-term trend growth rate since the Developed Market Crisis (DMC) of 2008/2009 is developed economies. Emerging Markets (EM) economies have grown in line with their long-term trends and are likely to continue to be the main growth engine of the global economy. Another common perception – that trade in EM countries has suffered more than in developed countries – is also wrong. In the post-DMC period, EM countries have done better in global trade than developed economies as EM’s share in global trade has gone up by 3% since 2010. The global trade imbalances that prevailed prior to the DMC are intact. This means that EM FX reserves will resume their rise once capital outflows and USD strength begin to wane, something that may already be happening.

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