MF Managing Director Christine Lagarde arrives for the G20 Summit at the International Expo Center in Hangzhou on September 4, 2016.G20 leaders confront a sluggish global economy and the winds of populism as they open annual talks, but the long war in Syria and the South China Sea
territorial dispute hang over the summit. / AFP / POOL / Rolex DELA PENA (Photo credit should read ROLEX DELA PENA/AFP/Getty Images)
It’s a toss up. Economic watchdogs blame central bankers and populist politics for lackluster growth.
International Monetary Fund chief Christine Lagarde calls it “the new mediocre”. That’s the old lower for longer thing. Back then, you used to be able to blame that on the U.S. and Europe healing from their self-inflected housing market collapse. Then it switched to blaming central banks in the U.S., Europe and Japan for not coordinating their road to zero interest rates. And now, the new villain that’s making merchant marine vessels drop anchor and Chinese stop buying Brazilian iron ore is — of course — riff-raff voters in Europe and the U.S.
On Monday, Fitch Ratings blamed both.
Downside risks to advanced country economic growth have risen in recent months thanks to anti-trade populism gaining traction in many countries. If status quo trade arrangements move to a more managed trade outlook in Europe and in the U.S., companies and investment analysts will have a harder time forecasting prices of goods and services. This, in theory, affects the outlook for private investment in the near-term. That’s on one hand.
On the other hand, the capacity of Japanese, European and U.S. central banks to strengthen growth appears to be diminishing.
Fitch lowered its forecast for U.S. growth in 2016 to 1.4% from 1.8% in their July Global Economic Outlook report.
“This year is likely to see the lowest annual growth rate for US GDP since 2009 as oil sector adjustments, weak external demand and the earlier appreciation of the dollar take their toll on industrial demand,” said Brian Coulton, chief economist at Fitch.
source - http://www.forbes.com/
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