News Column

Less Global Growth: Cohen Column

Oct. 16, 2012

Isaac Cohen --

Against the background of another slowdown in global growth, the annual meetings of the International Monetary Fund and the World Bank concluded last weekend in Tokyo.

The staff of the fund lowered the projections of global economic growth for this year and next, to 3.3 and 3.6, respectively. Olivier Blanchard, the fund's chief economist, summarized the reasons for the lowered projections, saying: "Low growth and uncertainty in advanced economies are affecting emerging market and developing economies."

The persistence of uncertainty in the euro zone, the slow U.S. recovery and almost no growth in Japan are again contributing to the global slowdown. This time, however, the so called BRICS -- Brazil, Russia, India, China and South Africa -- are not generating enough demand to compensate for the weakness in the advanced economies.

Even so, relatively positive messages were presented by some central bankers. Mario Draghi, president of the European Central Bank, said recent events in Europe support a "prudent optimism." Also, Federal Reserve Chairman Ben Bernanke said the last round of purchases of mortgage backed securities, by the central bank, strengthens the U.S. economic recovery. He also said that the program, "by boosting U.S. spending and growth, it has the effect of helping support the global economy as well."

Brazilian Minister of Finance Guido Mantega disagreed, saying that "advanced countries cannot count on exporting their way out of the crisis at the expense of emerging market economies."

Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.

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Source: (c) 2012. All rights reserved.

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