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麻省理工学院经济学博士

个性介绍: 1960年出生于上海,1983年毕业于上海同济大学路桥系,1987年获麻省理工学院土木工程学硕士,1990年获麻省理工学院经济学博士。同年加入世界银行,担任经济分析员。在世行的五年时间,谢国忠所参与的项目涉及拉美、南亚及东亚地区,并负责处理该银行于印尼的工商业发展项目,以及其他亚太地区国家的电讯及电力发展项目。1995年,加入新加坡的Macquarie Bank,担任企业财务部的联席董事。1997年加入摩根士丹利,任亚太区经济学家,2006年9月辞去该职务。

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emerging economies take charge  

2008-11-11 20:34:13|  分类: 言论 |  标签: |举报 |字号 订阅

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随想:新兴经济体话事了

  




Occasional Thoughts
Emerging economies take charge


Andy Xie

10 November 2008



Overthe weekend emerging economies are showing more understanding of whatshould be done than most OECD countries. The G-20 finance ministers inSao Paulo called for coordinated global fiscal stimulus to stabilizethe global economy. The BRIC finance ministers at the same meeting weretalking about coordinated measures to increase trade and capital flowsbetween their economies. The prominent emerging economies are behavinglike adults. That is very important. This crisis has much to do withthe unsustainable relationship between developed, especiallyAnglo-Saxon, economies, and emerging economies. To regain growth andsustain globalization the leading emerging economies need to take moreownership in managing the global economy.



China'sannouncement of fiscal stimulus is well received by the market. It isnot yet entirely clear how much of the package represents new money.From the announcements of the Ministries of Railroads andCommunications and the State Council it seems that the stimulus amountsto 2% of GDP. The amount is obviously insufficient to reverse theeconomic deceleration due to export and property contraction. However,the stimulus will cushion the downturn and should be welcome news forthe market. More importantly, it represents a change of thinking at thetop. Until one month ago the official line was still that China wasdoing fine despite the global crisis. The change of mind will lead tomore fiscal measures, if need be, to stabilize the economy.



TheUnited States seems to be on the verge of a second stimulus package ofaround $300 billion with focus on investment rather than consumption.This is certainly a step in the right direction. The US needs to expandits production capacity to boost income and cut trade deficit.Consumption stimulus only worsens its imbalance. The negative wealtheffect on consumption in the US is probably $700 billion. The housinginvestment continues to shrink. The auto sector continues to collapse.Capex is probably shrinking too, as CISCO's profit warning suggests. Iwouldn't be surprised that the US's domestic demand could shrink byover $1 trillion. The fiscal stimulus may offset that by one third toone fourth. The US's GDP will likely shrink by 3-4%, trade deficit by2-3% of GDP, and domestic demand by 5-7%.



The USstimulus is negative for the dollar. If the US domestic demand cashes,it decreases trade deficit and repels foreign capital. These twofactors work in opposite directions. When the domestic demand is weakenough, the former takes the upside and the dollar strengthens with aweakening economy. At the other extreme, when the US economy is verystrong, the capital attraction overwhelms the trade deficit increaseand the dollar strengthens with a strengthening economy. The dollar isweak in the middle ground. The stimulus package may put the US economyin the middle.



Korea is another significant economythat has announced over 1% of GDP in fiscal stimulus. Most othereconomies are still relying on cutting interest rates. The Bank ofEngland and the Reserve Bank of Australia have cut very aggressively.As I have written before, lowering interest rates is good for financialstability but won't stimulate demand under the current circumstances.Asset deflation has cut the equity capital of borrowers. Banks are notin a position to lend to undercapitalized borrowers. They want to lendto governments. Hence, fiscal stimulus works!



Europe isvery reluctant to stimulate for good reasons. They just incurred hugecosts in recapitalizing their banks, have high levels of fiscaldeficits and national indebtedness. Europe is about the same size asall emerging economies combined. If Europe doesn't do a significantfiscal stimulus, the downward trend of the global economy cannot bestopped.



Taking into account of what governments aredoing on interest rate and fiscal stimulus, the global economy willlikely contract this quarter and the first half of 2009. Thecontraction will probably stop in the third quarter of 2009. Vigorousgrowth, however, won't follow economic stabilization. The past growthdynamic-the US debt-financed consumption and China's debt-financedfactory building feeding on each other won't return in the foreseeablefuture. Boosting trade and investment among emerging economies may bethe only scenario for the next growth cycle. This is why what G20 aredoing could lead to something significant.



Emergingeconomies must understand that the developed economies could not carrythe emerging economies like before, because the emerging economies havegrown to 30% of global GDP and 50% of trade (ex-intra eurozone trade).They are just too big to behave like children in relation to developedeconomies. For example, they should not wait for the US economy to comeback for them to regain strong growth. They need to regain trade bytrading and investing between themselves.



For theSouth-South scenario to work out, we need to see institutionalbreakthroughs at the G20 level. For example, if BRIC countries sign afree trade agreement among themselves, it would be a major catalyst fora new growth cycle. If China makes investments easier and securer forArab money, it would make a significant difference.



Conclusion:Fiscal stimulus measures are stabilizing the global economy. But,contraction will last through the first half of 2009. The stimulus isbad for the dollar. A new growth cycle depends on emerging economiestrading and investing between themselves.

  

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