Achieving Escape Velocity
While the prospect of faster global GDP growth in 2014 is good news, it is too early to celebrate. Indeed, there is a risk that, by tempting policymakers into complacency, this year’s economic upturn could even end up being counterproductive.
NEWPORT BEACH – It is not often that one can confidently claim that a single remedy could make billions of people around the world significantly better off; do so in a durable and mutually supportive manner; and thus improve the well-being of both current and future generations. Yet that is the case today.
The remedy I have in mind, of course, is faster economic growth – the one thing that can raise living standards, reduce excessive inequalities, improve job prospects, alleviate trade tensions, and even moderate geopolitical pressures. And most forecasters – including the International Monetary Fund and the World Bank – are now predicting that global growth will pick up in 2014, and that it will be more balanced among the world’s major economic regions.
Such forecasts reflect three welcome developments. For starters, Europe will exit recession, with the peripheral economies benefiting from the strongest relative improvement in growth prospects. Meanwhile, 3% annual GDP growth is no longer out of reach for the United States. And emerging economies will be anchored by China’s slower but still-robust 7% annual growth.
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