Christine Lagarde, Managing Director of the International Monetary Fund IMFPhoto/Flickr

The Year Ahead 2016

The Transitions of 2016

Global growth in 2016 will be disappointing and uneven, and medium-term prospects have weakened as well, because low productivity, aging populations, and the legacies of the global financial crisis are holding back potential growth. And looming over this outlook is the need to manage spillovers from two major economic transitions.

WASHINGTON, DC – November’s terrorist attack in Paris and the influx of refugees into Europe are but the latest symptom of sharp political and economic tensions in North Africa and the Middle East. And these events are by no means isolated. Conflicts are raging elsewhere, too, and there are close to 60 million displaced people worldwide.

Moreover, 2015 was expected to be one of the hottest years on record, with an extremely strong El Niño that has spawned weather-related calamities across the Pacific. And the arrival of interest-rate normalization in the United States, together with China’s slowdown, is contributing to uncertainty and higher economic volatility worldwide. Indeed, there has been a sharp deceleration in the growth of global trade, with the drop in commodity prices posing problems for resource-based economies.

One reason that the global economy is so sluggish is that, seven years after the collapse of Lehman Brothers, financial stability is not yet assured. Financial-sector weaknesses linger in many countries – and financial risks are growing in emerging markets.

To continue reading, please subscribe to On Point.

To access On Point, log in or register now now and read two On Point articles for free. For unlimited access to the unrivaled analysis of On Point, subscribe now.

required

Log in

http://prosyn.org/7ejYaKW;
  1. TOSHIFUMI KITAMURA/AFP/Getty Images

    The AI Debate We Need

    • Rapid advances in artificial intelligence and related technologies have contributed to fears of widespread job losses and social disruptions in the coming years, giving a sense of urgency to debates about the future of work. 

    • But such discussions, though surely worth having, only scratch the surface of what an AI society might look like.
  2. SOPA Images/Getty Images

    Criminalizing the Truth

    interviews
    • Why is Poland legislating what can and cannot be said about its Holocaust history? 

    • While one reason is that its leaders don't know enough about the subject, the most important factor is the ruling Law and Justice party's increasingly naked appeal to anti-Semitism.
  3. Chinese Yuan Renminbi and Dollar banknotes Wodicka/ullstein bild via Getty Images

    Could the Renminbi Challenge the Dollar?

    • China’s rapid economic growth, coupled with savvy monetary management by its leaders, has internationalized the renminbi to a degree that scarcely could have been imagined just a few decades ago. 

    • But if China’s leaders ever want to challenge the US for global currency dominance, they will need to think and act more radically.
  4. US President Donald Trump speaks about the passage of tax reform legislation SAUL LOEB/AFP/Getty Images

    Economic Policymaking in the Age of Trump

    • For decades, America has suffered from a long-run productivity slowdown that has sapped the economy of its former dynamism, and left median wages stagnant.

    • Will the tax legislation recently enacted by congressional Republicans and the Trump administration finally reverse this trend, or will it make a bad situation worse?