Are fixed exchange rates bad for growth? Much of the economic literature suggests no causal relation between a country’s exchange rate regime and economic growth. But the IMF has produced a paper suggesting that sub-Saharan Africa may be different.
Manuk Ghazanchyan and Janet Stotsky, the authors, perform a random effects model and find that non-oil exporting nations that claimed to have a flexible exchange rate had significantly higher GDP per capita growth from 1999 to 2011. Continue reading »
Emerging markets are so over. So says Lawrence Summers – you can read beyondbrics’ take on his theory here – and so says Anders Aslund, in a paper published by the Peterson Institute, titled Why Growth in Emerging Economies Is Likely to Fall.
Another body blow to the catch-up theorists. What’s the argument this time? Continue reading »
Do you bet on two baseball players who are on a lucky streak? The law of averages says no: in the long run, both players will revert to their mean scores.
By the same rule of thumb, Larry Summers says that economists should not expect India and China to grow significantly above their long-term average of 2 per cent per capita. (Anders Aslund has a similar argument – which beyondbrics examines here.) Continue reading »
It turns out the OECD’s May forecasts (made days after hints of tapering) were off… by quite a lot.
On Tuesday, the body knocked 2.3 percentage points off its forecasts for India’s GDP growth in 2013, for example, and 1.7 points off its growth in 2014. Continue reading »
An interesting take on the 1997 Asia crisis from Carmen Reinhart, known for her influential (before it was corrected) paper on the relation between growth and debt, and Takeshi Tashiro.
A new research paper from the two economists this week argues that Asia still hasn’t recovered from 1997 in one key regard: investment is still pitifully low, from India to South Korea. Continue reading »
Maybe it’s time to start preparing for a return wave of CEE migrants from western Europe, as Thursday’s flash GDP third quarter numbers show that most of the region’s economies are experiencing a sharp recovery – in contrast to stagnation in the eurozone.
While the eurozone stumbled to an anaemic 0.1 per cent growth for the quarter, Poland posted a higher-than-consensus expansion of 1.9 per cent, up from only 0.8 per cent in the second quarter.
Continue reading »
A mixed picture for the prospects of an economic recovery emerging Europe, according to Monday’s forecast from the European Bank of Reconstruction and Development.
The EBRD found that the more advanced countries of central Europe will probably do a bit better than expected next year, while the rest of the post-communist region is sputtering. Continue reading »
Research by Harvard’s Ricardo Hausmann has found that Mexico, Zimbabwe and Egypt are well-positioned to grow. Qatar and Brazil are less well-placed, while China risks recession. In part two of a discussion with John Authers, he explains his unexpected predictions.
Liu Li-Gang, ANZ’s chief China economist, talks to the FT’s Josh Noble about China’s reliance on investment over consumption, and the prospects for reform and rebalancing of the economy.
By Saurabh Mukherjea and Ritika Mankar Mukherjee
It is hard to read a newspaper these days, whether in India or abroad, without running into opinion pieces criticising the performance of the Indian economy. Whilst the critics differ in their targets – some focus on the incumbent administration’s incompetence, others on India’s institutional shortcomings such as endemic corruption – as the tide of cheap American money recedes, India’s shortcomings are clear for all to see. Not only is the currency battered, the economy too will slide towards low single digit growth.
We disagree not so much with India’s economic predicament – the weak economic growth and the sliding rupee are matters of fact – but with the portrayal of a cyclical downturn as a structural crisis. This, to our mind, is one of the three myths regarding India that are being perpetuated at present. Continue reading »
What’s the difference between Kenya and Nigeria? About two centuries, according to a new study by Stephen Broadberry and Leigh Gardner, two professors at the London School of Economics.
The pair have totted up the levels of GDP per capita of the countries of Africa, and compared them with historic rates of GDP per person in pre-industrial Europe. Citizens of Sierra Leone are about as rich as early medieval Englishmen, and modern-day Kenyans are just as rich as Elizabethans. Continue reading »
India may well be facing its worst economic crisis since the 1990s and confidence is worryingly low. To make matters worse, on Friday the government announced the weakest economic growth data in four years with GDP expansion down to 4.4 per cent in the three months to June.
In response, several banks have slashed their growth forecasts, some by over 1 percentage point. It’s looking pretty grim. Continue reading »
Investors have been yanking their funds out emerging market equities and bonds. Robin Wigglesworth, capital markets correspondent, highlights how EM fundamentals are also coming under pressure.
With violence on the streets of Egypt coming hot on the heels of the public protests in Brazil and Turkey, it takes a brave man to write a report entitled: “EM is not much riskier than DM”.
But Simon Quijano-Evans of Commerzbank has done just that – arguing that while young populations put emerging markets at greater risk of political upheavals they also provide the energy that will power developing economies into the future while the developed world is held by back by the burdens of debt and old age. It’s probably true in the long run, but for a leader like Egypt’s Mohamed Morsi it’s the next few days that matter. Continue reading »