TOWARD ANOTHER WORLD

ECONOMIC CRISIS?

For Global Human Resources

Forum 2011

ECONOMIC CRISIS?HUANG WEIPING (PhD)

PROFESSOR

SCHOOL OF ECONOMICS

RENMIN UNIVERSITY OF CHINA

wphuang@netchina.com.cn

KEY WORDS FOR THE WORLD

ECONOMY IN 2011

SLOW DOWN RECOVERYSLOW DOWN RECOVERY

PUBLIC DEBT

RESTRUCTURE

REBALANCDE

INFLATION

MOST ISSUES

WORLD ECONOMY: DOUBLE – DIP?

SOVEREIGN DEBT RISKS IN U.S.A. & SOVEREIGN DEBT RISKS IN U.S.A. &

EU?

BRICS ECONOMIC DEVELOPMENT:

SLOW-DOWN?

GENERAL TENDENCY

• No double-dip crisis: Continuing Slow

Economic Recovery with Uncertainty

• Rebalance and Restructure the Global

Economy : Developed & Developing. Economy : Developed & Developing.

• Public debt issue in Developed Economies:

hurt but could not crash economies.

• Toward Inclusive and Sustainable Growth

Forecast By IMF

• Global activity is forecast to expand by 4.8 percent in 2010 and 4.2 percent in 2011, with a temporary slowdown during the second half of 2010 and the first half of 2011.

• Output of emerging and developing economies is projected to expand at rates of 7.1 percent and 6.4 projected to expand at rates of 7.1 percent and 6.4 percent in 2010 and 2011,

• respectively. In advanced economies, however, growth is projected to be only 2.7 percent and 2.2 percent,

• Source: IMF, WEO, October 2010

Forecast By IMF

• We expect the world economy to grow at about 4.5 percent a year in both 2011 and 2012, but with advanced economies growing at only 2.5percent while emerging and developing economies grow at a much higher developing economies grow at a much higher 6.5percent.

• Earlier fears of a double-dip recession—which we did not share—have not materialized.

• Source: IMF, WEO, April 2011

FIGURE 19-3 Stagflation in the United States, 1970-1999,

Salvatore: International Economics, 7th Edition © 2001, John Wiley & Sons, Inc.

Is Global Policy Successful?

• Subject Grade

• Sustainable Growth B-

• Economic Structure Reform C+

• Financial Policy C-• Financial Policy C-

• Fiscal Policy B

• Trade Policy C

• Financial Regulation B-

• Macro policy Cooperation C

• Climate Change C

REBALANCE

TERMINOLOGIC CHANGE?TERMINOLOGIC CHANGE?

EXPORT – DRIVEN CAUSED?

Less production, more Less production, more Less production, more Less production, more consumption?consumption?consumption?consumption?

CURRENCY WAR?

Imbalance of World Economy

• Changes of Meaning of Imbalance of World

Economy:

• Old Concern (during 1970’s-1990’s):

• Imbalance between the rich and poor • Imbalance between the rich and poor

economies in the global village, the developed

have the responsibility help the poor to meet

the basic needs, then the growth in the world

could be called sustainable

•

In 2000, the countries of the United Nations established eight Millennium Development Goals—ambitious targets to Development Goals—ambitious targets to halve poverty, fight hunger and disease, and deliver basic services to the poor by 2015. These goals, our goals, are posted by the main entrance of our headquarters building, reminding us every day of what we come to work to accomplish.

— Robert B. Zoellick

WLFARE

% OF POPULATION LIVING 15%

BELOW PPP $1/DAY IN 2002

> 20% 5%

10%

Imbalance of World Economy

• New Concern ( First Decade of 21th Century) :

• Current Account unsustainability,

• Environmental and social deficit,

• Change of the focus: meeting basic need for

LDCs substituted by the current account issues

and green development(Copenhagen

conference)

Balance vs Rebalance

• In the past “Balance” means to help less-

developed to meet the basic needs and to get

development;

• Today, “Rebalance” means to balance the • Today, “Rebalance” means to balance the

current account either in the developed and

in the emerging economies different in

surplus and deficit;

• Today, focus more on green development and

social resilience but the basic needs met;

Imbalance in World Economy

• With globalization, unbalance allocation of resources in the world.

• NIEs as BRICS focus on goods production, developed on services and income distribution by the strong financial Industry.by the strong financial Industry.

• Then, over-production in NIEs, over consumption in developed economies.

• Two imbalances meet each other, vulnerable balance established in world economy in the past.

• What about today?

PUBLIC DEBT ISSUE IN

DEVELOPED ECONOMIEDEVELOPED ECONOMIE

U.S.A., EURO ZONE

QUANTITY

• sovereign debt crisis

REASONS

• U.S.A.: TAXATION, EXPENDIRUE, OVER

CONSUMPTION;

• EU: The crisis exposed systemic failures in the

EU's economic governance, notably lack of EU's economic governance, notably lack of

fiscal authority and economic coordination at

the bloc's level despite the fact that member

economies are so deeply integrated.

IMPACT

• WORLD ECONOMY: SLOW DOWN RECOVERY

• CONSUMPTION AND INNOVATION ARE THE

ENGINE FOR GRWTH;

• NEGTIVE IMPACT TO EU,• NEGTIVE IMPACT TO EU,

• POSITIVE IMPACT TO U.S.A.

MORE EUROPEAN, LESS NATIONAL

• EU: 440 billion-euro rescue fund. CO-

operation, more integration.

• U.S.A.: NO PROBLEM FOR RECENT DEBT

ISSUEISSUE

Conclusion• Recovery Goals Have been slowly

Achieved, while Serious Risks Remains.

• Different Economies should improve the

policies Co-operation.

• Rebalance:Promote Higher Savings in

Developed Economies with Higher

Spending in Emerging Economies;

• Restructure the Economic Growth Pattern,

• Inclusive and Sustainable Growth Needed.

Q & A : DISCUSSION

• THANKS,

• COMMENTS?

• DISCUSSION?

• SUGGESTION?

• AND ...?