The global recovery has hit several unforeseen bumps – particularly the crisis in Ukraine and the unusually long, cold winter in the US – but the world’s growth is expected to be back on track for the second half of 2014 and the coming years.
That is the conclusion of the The World Bank’s flagship report on the state of the global economy, known as the Global Economic Prospects. Released twice yearly, it also includes three year forecasts covering the projected macroeconomic performance of each of the world’s regions.
It shouldn’t be surprising for global observers that overall GDP projections for 2014 have fallen on a raft of negative developments. The Bank has reduced the year’s growth outlook to 2.8 percent, versus its more optimistic January expectation of 3.2 percent. Yet this is largely blamed on what the report labels “idiosyncratic” factors, especially in the US, where “abnormally cold weather curtailed investment and exports, while firms cut back on inventories” during the first quarter.
Yet the Bank also argues that, after years of substandard and halting expansion, it is the world’s developed economies that will lead the way towards faster growth.
Last Friday saw the 49th annual meetings of the African Development Bank (AfDB) come to a close in Kigali, Rwanda. The Bank, which turns 50 later this year, held the five-day gathering under the banner “The Next 50 Years: The Africa We Want,” focusing on long-term efforts to meet its goal of reducing poverty by promoting investment across the continent. The more than 3,000 delegates in attendance discussed the challenges facing the AfDB’s 54 regional member countries and steps that should be taken to help Africa meet its potential.
Rwanda was a fitting venue for the events, as the host country marks the twentieth anniversary of the genocide in which an estimated 800,000 Tutsis and moderate Hutus were killed in the span of just 100 days. Although its government is not without its critics, Rwanda has emerged from the devastation of the genocide as a leading example of resilience and economic potential, posting strong economic growth numbers in recent years and rolling out numerous home-grown reforms.
AfDB President Donald Kaberuka, who before taking the helm of the Bank served eight years as Rwanda’s Finance Minister, urged delegates in remarks Thursday to draw on the Rwandan example and “look to their culture, their history, the nature of the crisis they face and come up with their own solutions.”
It has been a wild month of elections around the world. Historic polling, with dramatic geopolitical implications, took place from India, the world’s largest democracy, to Colombia, where controversy over a still tenuous peace process grips the political elite. Then there was Ukraine, where national elections last Sunday capped months of political chaos, Russian territorial incursion, and a disturbing slide into armed civil conflict.
Amidst it all, elections to the European Parliament, the legislative body of the supra-national European Union government, might have seemed like an obscure exercise in bureaucratic turnover. Indeed, to many commentators and everyday Europeans, the elections seemed to be dwindling in importance: voter turnout for these contests has steadily diminished since the first election in 1979. In the last election, in 2009, only 43 percent of Europe participated, with voting among young adults down to 29 percent.
Yet far from being ignored, the results of last week’s elections have sent shock and panic through mainstream pro-EU political parties across Europe.
When the president of Uruguay, Jose Mujica, visited Washington DC in May, his presence generated more attention than usual for the head of state of a small, geographically remote country. This included a private bilateral meeting with President Obama, in the Oval Office, as well as a high profile speaking engagement at American University’s School of International Service.
A major part of the interest in President Mujica – who prefers to go by his nickname, “Pepe” – is his eccentric persona. He is infamous around the world for his austere lifestyle, preferring his small country house to a presidential palace and his Volkswagen Beetle to an armed motorcade.
But also on display during President Mujica’s visit was the willingness to pursue controversial or even unpopular policies that has defined his administration, and which makes Uruguay an interesting outlier in the region. Since taking power in 2010, President Mujica has pushed through measures to allow for gay marriage and create a legalization framework for cannabis, moves that would be unthinkable in most of Latin America.
More recently, President Mujica has taken on another issue that has become something of a third rail in international politics: the asylum of prisoners being housed in the United States’ Guantanamo Bay facility in Cuba.
From May 19th-20th, lead negotiators for twelve nations met in Singapore to continue negotiating the Trans-Pacific Partnership (TPP). The TPP would create a mostly-free trade zone between twelve nations which together account for 40 percent of total global output. It would include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, the United States, Vietnam and Singapore. Of these countries the US has existing Free Trade Agreements with Australia, Canada, Chile, Mexico, Peru and Singapore.
Should the countries reach a deal, it is expected to vastly increase trade and exports between these nations to the tune of $123 billion a year. These increased exports should then create positive ripple effects within the nations’ economies, most importantly for the US, job creation because exporting industries should be able to expand their workforces, and creating new export markets for small businesses.
It is particularly important for small businesses which want to export because tariffs are greater barriers to entry for them then they are for larger companies...
India’s voters are in the midst of the massive, month long process of choosing their next government, via nationwide elections to the Lok Sabha, the lower house of parliament. This election has drawn particular international attention – beyond the inherent importance of the political workings of the world’s largest democracy. A slowing economy, popular frustration with the apparent corruption and incompetence of the ruling Congress Party, worry over the simmering feud with Pakistan, and fears over domestic Hindu-Muslim ethnic tensions have thrown the stakes of the election into high relief.
In play are all 543 elected parliamentary seats, and the race is on to be the first party or bloc to reach the 272 seats necessary to form a government. To the Western press, at least, the chaos of this giant election has been framed as a contest between two men: Rahul Gandhi, the would-be successor of current Congress Party Prime Minister Manmohan Singh, and Narendra Modi, of the right wing, Hindu nationalist-affiliated Bharatiya Janata Party (BJP).
Modi, the current governor of the state of Gujarat in the country’s northwest, appears to be a clear favorite, riding a wave of dissatisfaction as India’s growth has fallen by half, to 5 percent.
President Barack Obama will be in Tokyo beginning April 23th for a much anticipated state visit with his counterpart, Prime Minister Shinzo Abe. In a world of increased tensions, from Crimea to the East China Sea, a number of critical topics will be on the agenda. Yet the most pressing topic at hand is likely to be the future of the sweeping Trans-Pacific Partnership (TPP), which has been caught in something of a stalemate since Japan’s entrance into the negotiations in 2013.
The visit comes as the first stop in President Obama’s swing through Japan, South Korea, Malaysia, and the Philippines, and is being closely watched for its implications for the state of the US-Japan alliance. That relationship has been strained in the past year over Japan’s territorial disputes with China, Prime Minister Abe’s visit to a controversial wartime shrine, and what the US has seen as Tokyo’s lackluster response to Russian aggression in Ukraine.
Indeed, President Obama’s arrival will mark the first state visit by a sitting US president since Bill Clinton in 1996, and the trip has been designated an official state visit, replete with dinner with the Emperor and accompanying pomp and ceremony.
Apart from disagreements over geopolitical and territorial issues, the US and Japan are facing major obstacles to trade negotiations, which must be surmounted if the TPP is to become a reality in the near future.
In 2003, African governments committed to dedicating 10 percent of their national budgets to agriculture in the Maputo Declaration on Agriculture and Food Security in Africa at the African Union. The nations were convinced that with this investment they could achieve 6 percent agricultural growth per year, which would lead, in turn, to a host of positive results including increased food security, a reduction in food imports, and lower unemployment.
Agricultural spending has grown 7 percent on average throughout the continent since then. But only 13 African nations – Burundi, Burkina Faso, the Democratic Republic of Congo, Ethiopia, Ghana, Guinea, Madagascar, Malawi, Mali, Niger, Senegal, Zambia and Zimbabwe – have reached the 10 percent goal in even one given year, and none have reached it every year.
An estimated 70 percent of Sub-Saharan Africans make their living from agriculture. Many of them engage in subsistence agriculture, which does not create enough capital to expand their operations or even support their families. Thus, deeper public investment would be designed to push these farmers past the subsistence level.
Given the importance of agriculture to the continent, the African Union (AU) has declared 2014 the “Year of Agriculture and Food Security.”
At the end of March, NATO announced its selection of former Norwegian Prime Minister Jens Stoltenberg as its next Secretary General. Stoltenberg, who will succeed current NATO chief Anders Fogh Rasmussen on October 1st, 2014, will take over at a critical juncture for the organization, with a newly assertive Russia serving as a reminder of NATO’s importance. His time as Norway’s head of state has made him uniquely qualified to facilitate cooperation among NATO member states, but he will also need to continue his predecessor’s strong leadership in a shifting geopolitical landscape.
Stoltenberg’s selection garnered wide praise from world leaders, both within and outside NATO. Although a fixture of the Norwegian left, his supporters are quick to point out his strong and friendly relations with German Chancellor Angela Merkel, a leading figure in Europe’s center right. In the nearly ten years he served as Prime Minister, he headed unusual coalition governments and was seen as a gifted consensus builder. Jens, as he is familiarly known to many heads of state, will be well positioned to rebuild support for NATO, flagging in recent years in all but a few member states, namely those bordering Russia.
On May 22-25, Europeans will go to the polls to elect a new European Parliament. Although the Parliament’s 766 members (MEPs) represent the world’s second largest electorate, after India, many observers discount the importance of the twice-a-decade vote. On one hand, the EP seems to face a crisis of relevance: voter turnout has declined in every election since voting began in 1979, reaching a low of 43 percent in 2009 with only 29 percent of 18-to-24-year-olds participating. Yet this election, taking place during a time of political and economic crisis in Europe, is being carefully watched as an indicator of changing attitudes toward European integration and EU policies.
Recent polls indicate that the EP’s two largest parties, the center-left S&D (currently with 194 seats) and the center-right EPP (now with 275), will receive nearly identical shares of votes, leaving both with about 214 MEPs. This projected leveling out comes with a shift away from the center, with far-left and far-right parties gaining seats.
Against the backdrop of struggling national economies, austerity policies and rising unemployment — increasingly attributed to intra-EU immigration — populist “euroskeptic” parties are ascendant. Polls indicating that euroskeptic parties may even win the plurality of votes in the United Kingdom and France have led some to predict that the May election could be a referendum on European integration.
When Janet Yellen faced Congressional questioning on February 11th for the first time as the newly minted Federal Reserve Chair, it was against a backdrop of precarious economic health.
Just days prior to her inaugural hearing before the House Financial Services Committee, the Labor Department had released another lackluster jobs report, suggesting that the US recovery may be weaker than many experts anticipated. In addition, the long-planned reduction – or taper – in the Fed’s stimulus program had shaken international emerging markets and raising global fears of a bursting bubble.
Congress wasted no time pressing her on all of these issues – and it is clear that the Fed’s first female Chair will have little, if any, honeymoon period. Markets, too, are looking to Yellen to provide guidance on how and when the Fed will execute the taper. In her first press conference as Fed Chair last week, Yellen spooked traders by implying that the Fed would begin to raise interest rates in as little as six months. Even though her answer was purposely vague and open to revision, stocks fell and rates rose as markets absorbed what they considered to be the bad news.
But it is also clear that Yellen will not shrink from continuing the Fed’s extraordinary measures to bolster the US recovery.
From March 1-2 of this year, the Prime Minister of Macedonia, Nikola Gruevski, convened his Investment Advisory Council for the purpose of developing a strategy to attract more foreign direct investment – and the jobs such investment creates – to his country.
In attendance were a number of high level government economic policy advisors, including most notably the Prime Minister himself as well as Bill Pavlevski, the Minister of Investments, and a number of other government advisors. Also attending was the Chief Operating Officer of Blue Star Strategies, Sally Painter, who was there among other prominent global executives.
Primary among the topics of discussion was the economic situation in Macedonia, which has demonstrated both encouraging successes and areas for growth.