The world economy is in crisis... well, half of it
Talking Point: one region’s economic crisis is another’s opportunity
DAVID CAMERON has echoed the IMF's warning that we face an economic catastrophe and demanded that EU leaders "stop prevaricating and finally show the will to cut their crippling budget deficits". China could help us out, but they will strike a hard bargain.
Worse than 2008?
The news is frighteningly bad, says an editorial in the Daily Mail, pointing to plummeting markets and the International Monetary Fund's plea for dithering politicians on both sides of the Atlantic to "get a grip if the world is to have any chance of returning to growth".
Indeed, there are warnings by the bucketload, and with good reason, says Larry Elliott in the Guardian. This could be autumn 2008 all over again, "only worse this time".
Policy makers have "used up virtually all their ammunition" – interest rates are already at historically low levels and countries that once had the cushion of sound public finances are now running big budget deficits.
But unlike 2008, when there was unanimity about the need to recapitalise shaky banks and stimulate the economy, there is "fat chance" of that happening again.
No unified response
Yes, the biggest problem now is the inability of policy makers to agree, says David Prosser in the Independent. We are not yet in a crisis and there is still time for action, which means "there is still time for arguments to rage".
It's worse than that, says Sam Fleming in the Times. The G20 still does not even appear to know how to diagnose the disease, let alone unite around a treatment. There is no sense of purpose, unity or direction – "only a cacophony calling for action".
Only half the world is in crisis
But it's not all bad, said Stephanie Flanders on BBC Radio’s Today programme. "Large parts of the world are doing quite nicely thank you". Countries that account for half of global GDP are going to grow six per cent or more in the next year. The hope is that these pockets of growth "will help soften the blow for some of the rich countries like America that are doing so badly".
China could help...
A crisis in the West is viewed as an opportunity in China, writes Robert Peston on BBC News. China is booming and the robust Chinese government and its businesses are in a position to help the ailing richer economies – "but they will strike a hard bargain". They will want access to export markets, businesses and assets in the US and Europe that have hitherto been protected.
And there's little sympathy for the West in China, writes Peston. "They take the view that the US and much of Europe have lived high on the hog for too long – and that we need to clean up our own mess". ·
Comments are now closed on this article