The Danger in Today’s Good Economic News
Failure to stem the rise of inequality will fuel social tensions and already-resurgent nationalism, producing disruptions that will ultimately lead to losses for everyone. That is why today’s good growth news may not be as promising as many believe.
WASHINGTON, DC – As 2018 begins, things are looking up for the global economy. Over the last six months, growth projections by official institutions like the International Monetary Fund, matched or even exceeded by private forecasts, have been adjusted upward. But not all of the news is good.
To be sure, there are plenty of positive indicators to inspire optimism. The eurozone Purchasing Managers’ Index for manufacturing hit an all-time high last month, and even Greece’s economy is finally growing. In the United States, growth now appears likely to exceed the IMF’s October prediction of 2.3% for 2018.
In the emerging world, China seems to have staved off the risk of a sharp slowdown: while its economy is no longer achieving double-digit growth, its increased size implies that, in absolute terms, today’s 7% annual rate exceeds the 10% rates of the past. Turkey, for its part, posted 11% growth in the third quarter of 2017. Even Brazil, which experienced negative growth in 2016, is likely to exceed the IMF’s forecast of 1.5% growth in 2018.