A decade that will shape the world Economy

Just after the birth of baby ‘DECADE’, it has started shouting clearly-

“I am going to make a lot of difference to the world. I am going to shape how the world economy will look like. I am going to provide direction to global trade and its future. The latter half of last decade has brought so many problems for world economy that I am pretty confident that I have enormous data/facts to shape World’s economy.”

 

This seems to be pretty correct and possible that first half of this decade will direct the world economy and trade. The recent economy downturn has brought the real face of world in front of everyone. One can now see the major World economies are divided into three chunks – the U.S., the euro zone countries and the developing countries. On one hand where the growth of developed nations is more dependent on its exports/global trade, the other hand tells that the developing nations were able to resist the wave of recession so effectively because of local policies and less dependency on trade.

Enough has already been written on how everyone has started adopting the policies to handle their domestic concerns rather than international concerns. This has back footed the agenda of finding solutions for global imbalance. This means what was looking as immediate possible is not even a distant possibility in the decade. This downturn has also revealed how a group of countries are dependent on each other for continuous growth. The developing nations are leading the recovery but their future growth largely depends on the growth of developed nations. And developed nations seem to be dependent on developing nations to come out of the depression. Though in short everyone is trying to create a layer of resistance to diminish the effect of world economy on self but it does not look like that one can remain unaffected by the economy status of other. No nations can remain secluded from the effect of what’s happening in Europe now. Any major problem and another downturn there will not only bring unforeseen consequences for Europe but also for the rest of the world.

This effect has brought in front a very interesting trend. To continue the path of growth, first one has to collaborate more within its own group and then will work with rest all the other groups. The sharp rise in dollar denominated inflows into emerging countries is posing major policy challenges for these governments. Evidently, such capital finds vast parts of Europe risky. U.S. has to understand this vicious circle and how downfall of Europe economy as well of Euro can bring everyone again on back foot. We are not yet out of recession and another recession can bring U.S. economy on knees. U.S. major’s needs to make sure that they (developed nations group) grow and come out together from existing downturn and the global policies for developing nations (the other group) provide equal opportunities for all developed nations. Growing together will not just reduce the increasing growth imbalance with in nations but it will also ensure that we will not face another downfall.

Similarly, the developing nations has to grow within their own group (of developing nations) first and then need to make sure that developed nations group is coming together and still growing. Else they cannot expect similar growth for long term. This could mean a little decline in growth rate for them in short term but it will also make sure that they will keep growing at good rate for much longer term/period. They need to design their policies in such a way that they create a balance where they don’t give too much liberty to developed nations that could just help developed nations and also they are not turning their face away from them. The country that can find the recipe of this prefect balance will grow at a steady rate for much longer phase than anyone else.

At last I just like to re-iterate the old saying ‘Work as a team’ because

‘Together Everyone Achieves More’.