How much longer can major economies like the U.S. engage in historically unprecedented levels of monetary and fiscal stimulus that provides, at best, levels of economic growth so unimpressively marginal?
Economic slowdown – : “International Monetary Fund has cut its forecast for 2013. In July, the IMF projected global GDP growth for the current year of 3.2 percent; this has now been cut back to only 2.9 percent, despite the continuation of massive fiscal and monetary stimulus by sovereigns and central banks throughout the world.
For 2014 the IMF now projects global economic growth of 3.6 percent, a reduction from an earlier forecast of 3.8 percent. These reductions come despite the IMF boosting its projection of economic growth in the UK. Contrasting with so-called “green shoots” that some pundits have pointed to since 2009, there continues to be an avalanche of bad economic data throughout the world; supposed economic recovery in one region or country is offset by worsening news elsewhere. In the meantime, central banks throughout the world, and especially in developed countries, continue to flood the globe with unprecedented levels of liquidity, all conjured out of thin air. Without this radical level of monetary easing, the already anemic levels of economic growth, typically substantially below the proportion of fiscal deficits to GDP in many sovereigns, would almost certainly collapse. – According to the IMF, a slowdown in economic growth in major emerging markets, in particular China, Russia, India and Mexico is creating a drag on overall global economic expansion. This seems almost a reversal from the onset of the crisis in 2008, when the United States was the major driver of the global economic and financial crisis and China viewed as the primary savior. The IMF now sees the U.S. as being the sovereign most pivotal for facilitating global economic growth, in the wake of the slowdown in China and other major emerging economies.”
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