Gurús Económicos - Boom or bust? The global economy in 2007
Enviado: 18/9/2006 14:37http://edition.cnn.com/2006/BUSINESS/09 ... us.Rogoff/
Boom or bust? The global economy in 2007
POSTED: 1143 GMT (1943 HKT), September 18, 2006
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(CNN) -- In the coming weeks, four leading economists and analysts will be looking ahead to the prospects for the global economy during 2007.
The first of these is Kenneth S. Rogoff, Professor of Economics and Thomas C. Cabot Professor of Public Policy at Harvard University in the United States, and formerly chief economist and director of research for the International Monetary Fund.
Q. How do you think the global economy will perform in overall terms during 2007?
A. The central scenario is a fifth year of strong, above trend growth. Europe and Japan have come out of their growth doldrums, counterbalancing a slowing U.S. economy.
China will likely continue as the energizer bunny of the global economy, with double digit growth. People must not forget, however, that China remains an emerging market and the possibility of meltdown is always present. India's growth prospects are perhaps more solid albeit somewhat more modest than China's.
As long as the present healthy environment persists, Latin America will continue to chug along thanks to strong exports. Overall, however, the region's growth performance ought to be a lot, lot better than it is actually is in these best of times.
How can Brazil, which accounts for 40 percent of Latin American income, manage to grow at a measly 3.5 percent in a global boom era like this? The answer, unfortunately, is that the political class is still unwilling to face up to the reforms needed to promote faster growth, like greater opening to trade, reducing the government's influence in the economy, and liberalizing labor markets.
Africa is in a similar situation, but worse, as the politics in many countries is even more problematic, and income starts from a much lower base.
Against this very positive overall scenario, there are a number of big economic risks, in addition to multitude of geopolitical ones. These include the possibility of continuing collapse in U.S. housing prices, rising levels of inflation around the world, and the overhang of outsized United States borrowing from abroad.
Q. How might oil prices in particular affect economic performance next year?
A. If oil prices stay high due to uncertainty about the Middle East, they will constitute a small but noticeable drag on a growth, which would be even boomier otherwise. Unless oil prices rise quite a bit further, however, their effect on inflation should be less in 2007 than it was in 2006.
The oil countries are very happy, of course, even though prices have fallen off their peaks. Still, some oil exporters like Venezuela, who are managing their economies recklessly, will lose their swagger if oil prices continue to drop.
The long term trend price of oil is probably around $50 per barrel right now, but one thing we can count on is continued volatility. Indeed, I predict that we will see at least one period of $20 dollar oil at some point over the next ten years, although unfortunately we will probably also face a bout of $120 oil; at that level, the consumers would feel real pain.
Q. What is the outlook for the U.S. economy?
A. This is the big question. Will housing prices actually start falling, and if they do, will consumers tighten up and throw the U.S. into recession?
The best bet is that the U.S. will only experience a slowdown to below trend growth next year, not a recession. Of course, as growth edges down, it will take less of a shock to push the economy into a full blown downturn.
Q. What other individual factors are likely to be significant during 2007?
A. The biggest wildcard is the U.S. dollar, which is likely to fall quite a bit some day as part of the process of unwinding the United States' massive trade deficits.
But will it be in 2007? So far, the dollar has been held up by the fact that U.S. interest rates have been rising faster than foreign interest rates, but over the coming year, that differential is likely to mute, bringing the US's addiction to borrowing back to center stage. I would look for a run-up in longer term interest rates everywhere as the expansion cycle matures.
Boom or bust? The global economy in 2007
POSTED: 1143 GMT (1943 HKT), September 18, 2006
Adjust font size:
(CNN) -- In the coming weeks, four leading economists and analysts will be looking ahead to the prospects for the global economy during 2007.
The first of these is Kenneth S. Rogoff, Professor of Economics and Thomas C. Cabot Professor of Public Policy at Harvard University in the United States, and formerly chief economist and director of research for the International Monetary Fund.
Q. How do you think the global economy will perform in overall terms during 2007?
A. The central scenario is a fifth year of strong, above trend growth. Europe and Japan have come out of their growth doldrums, counterbalancing a slowing U.S. economy.
China will likely continue as the energizer bunny of the global economy, with double digit growth. People must not forget, however, that China remains an emerging market and the possibility of meltdown is always present. India's growth prospects are perhaps more solid albeit somewhat more modest than China's.
As long as the present healthy environment persists, Latin America will continue to chug along thanks to strong exports. Overall, however, the region's growth performance ought to be a lot, lot better than it is actually is in these best of times.
How can Brazil, which accounts for 40 percent of Latin American income, manage to grow at a measly 3.5 percent in a global boom era like this? The answer, unfortunately, is that the political class is still unwilling to face up to the reforms needed to promote faster growth, like greater opening to trade, reducing the government's influence in the economy, and liberalizing labor markets.
Africa is in a similar situation, but worse, as the politics in many countries is even more problematic, and income starts from a much lower base.
Against this very positive overall scenario, there are a number of big economic risks, in addition to multitude of geopolitical ones. These include the possibility of continuing collapse in U.S. housing prices, rising levels of inflation around the world, and the overhang of outsized United States borrowing from abroad.
Q. How might oil prices in particular affect economic performance next year?
A. If oil prices stay high due to uncertainty about the Middle East, they will constitute a small but noticeable drag on a growth, which would be even boomier otherwise. Unless oil prices rise quite a bit further, however, their effect on inflation should be less in 2007 than it was in 2006.
The oil countries are very happy, of course, even though prices have fallen off their peaks. Still, some oil exporters like Venezuela, who are managing their economies recklessly, will lose their swagger if oil prices continue to drop.
The long term trend price of oil is probably around $50 per barrel right now, but one thing we can count on is continued volatility. Indeed, I predict that we will see at least one period of $20 dollar oil at some point over the next ten years, although unfortunately we will probably also face a bout of $120 oil; at that level, the consumers would feel real pain.
Q. What is the outlook for the U.S. economy?
A. This is the big question. Will housing prices actually start falling, and if they do, will consumers tighten up and throw the U.S. into recession?
The best bet is that the U.S. will only experience a slowdown to below trend growth next year, not a recession. Of course, as growth edges down, it will take less of a shock to push the economy into a full blown downturn.
Q. What other individual factors are likely to be significant during 2007?
A. The biggest wildcard is the U.S. dollar, which is likely to fall quite a bit some day as part of the process of unwinding the United States' massive trade deficits.
But will it be in 2007? So far, the dollar has been held up by the fact that U.S. interest rates have been rising faster than foreign interest rates, but over the coming year, that differential is likely to mute, bringing the US's addiction to borrowing back to center stage. I would look for a run-up in longer term interest rates everywhere as the expansion cycle matures.