Chinese-Dragon
RETIRED TTA
Here is a recent article from "The Economist", regarding the prospects for the the global economy.
Emerging economies: Who has the most wiggle room? | The Economist
Emerging economies: Who has the most wiggle room? | The Economist
Jan 27th 2012, 10:36 by P.D.W. | LONDON
BOTH the International Monetary Fund and the World Bank have recently warned that if the euro-area crisis worsens it could drag the world into another deep recession. If so, emerging economies would once again be hurt by falling exports and a drying up of capital inflows. This week’s Free exchange column examines which countries have the most fiscal and monetary firepower to boost their domestic demand.
We have ranked 27 emerging economies according to their monetary manoeuvrability and fiscal flexibility (you can compare the individual indicators we used here). Our overall “wiggle-room index” offers a rough ranking of which economies are best placed to withstand another global downturn. Countries are coloured in the chart according to our assessment of their ability to ease: “green” means it is safe to let out the throttle, “red” means the brake needs to stay on.
The index suggests that China, Indonesia and Saudi Arabia have the greatest room to support growth.
At the other extreme, Egypt, India and Poland have the least room for a stimulus, thanks to excessive government borrowing, large current-account deficits, and uncomfortably high inflation.
Brazil is also in the red zone. Unfortunately, some of the big economies where growth has recently slowed quite sharply, such as Brazil and India, have less room to ease policy than China, which has less urgent need to bolster growth.
On the other hand, China’s ample room for easing supports the case for a soft rather than a hard landing of its economy. That would be a huge relief given that China alone accounted for one third of global GDP growth last year.