Tuesday, January 28, 2014

Nouriel Roubini vs El-Erian



Bloomberg discussion on economy

Friday, January 24, 2014

Which emerging markets will do well in 2014

The better-performing emerging markets are those with fewer macroeconomic, policy, and financial weaknesses: South Korea, the Philippines, Malaysia, and other Asian industrial exporters; Poland and the Czech Republic in Europe; Chile, Colombia, Peru, and Mexico in Latin America; Kenya, Rwanda, and a few other economies in Sub-Saharan Africa; and the Gulf oil-exporting countries.

Wednesday, January 22, 2014

China wont crash in 2014

China will maintain an annual growth rate above 7% in 2014. But, despite the reforms set out by the Third Plenum of the Communist Party's Central Committee, the shift in China's growth model from fixed investment toward private consumption will occur too slowly. 

Many vested interests, including local governments and state-owned enterprises, are resisting change; a huge volume of private and public debt will go sour; and the country's leadership is divided on how quickly reforms should be implemented. So, while China will avoid a hard landing in 2014, its medium-term prospects remain worrisome.

Tuesday, January 21, 2014

Emerging economies to do better in 2014 than 2013

Emerging economies will grow faster in 2014 - closer to 5% year on year - for several reasons. Brisker recovery in advanced economies will boost imports from emerging markets. 

The Fed's exit from QE will be slow, keeping interest rates low. Policy reforms in China will attenuate the risk of a hard landing. And, with many emerging markets still urbanizing and industrializing, their rising middle classes will consume more goods and services.

Still, some emerging markets - namely, India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela - will remain fragile in 2014, owing to large external and fiscal deficits, slowing growth, below-target inflation, and election-related political tensions. Some of these countries - for example, Indonesia - have recently undertaken more policy adjustment and will be subject to lower risks, though their growth and asset markets remain vulnerable to policy and political uncertainties and potential external shocks.

Monday, January 20, 2014

Roubini: US to continue benefit from Slale

In the US, economic performance in 2014 will benefit from the shale-energy revolution, improvement in the labor and housing markets, and the "reshoring" of manufacturing. 


The downside risks result from political gridlock in Congress (particularly given the upcoming midterm election in November), which will continue to limit progress on long-term fiscal consolidation; a lack of clarity about the Federal Reserve's planned exit from quantitative easing (QE) and zero policy rates; and regulatory uncertainties.

Sunday, January 19, 2014

China will continue 7 percent growth

China will maintain an annual growth rate above 7% in 2014. But, despite the reforms set out by the Third Plenum of the Communist Party’s Central Committee, the shift in China’s growth model from fixed investment toward private consumption will occur too slowly. Many vested interests, including local governments and state-owned enterprises, are resisting change; a huge volume of private and public debt will go sour; and the country’s leadership is divided on how quickly reforms should be implemented. So, while China will avoid a hard landing in 2014, its medium-term prospects remain worrisome.



Friday, January 17, 2014

What Japan Abe needs to do

In Japan, Prime Minister Shinzo Abe's government has made significant headway in overcoming almost two decades of deflation, thanks to monetary easing and fiscal expansion. 

The main uncertainties stem from the coming increase in the consumption tax and slow implementation of the third "arrow" of "Abenomics," namely structural reforms and trade liberalization.

Thursday, January 16, 2014

Fundamental problems still in Europe

Europe's fundamental problems remain unresolved: low potential growth; high unemployment; still-high and rising levels of public debt; loss of competitiveness and slow reduction of unit labor costs (which a strong euro does not help); and extremely tight credit rationing, owing to banks' ongoing de-leveraging. 

Meanwhile, progress toward a banking union will be slow, while no steps will be taken toward establishing a fiscal union, even as austerity fatigue and political risks in the euro-zone's periphery grow.

Wednesday, January 15, 2014

Structural reforms needed to grow faster

The outlook for 2014 is dampened by longer-term constraints as well. Indeed, there is a looming risk of secular stagnation in many advanced economies, owing to the adverse effect on productivity growth of years of under-investment in human and physical capital. 

And the structural reforms that these economies need to boost their potential growth will be implemented too slowly.

Tuesday, January 14, 2014

Nouriel Roubini is cautiously optimistic for 2014

Most advanced economies (the US, the eurozone, Japan, the United Kingdom, Australia, and Canada) will barely reach potential growth, or will remain below it. 

Households, banks, and some non-financial firms in most advanced economies remain saddled with high debt ratios, implying continued deleveraging. High budget deficits and public-debt burdens will force governments to continue painful fiscal adjustment. And an abundance of policy and regulatory uncertainties will keep private investment spending in check.

Monday, January 13, 2014

Economy to grow in 2014

The good news is that economic performance will pick up modestly in both advanced economies and emerging markets. The advanced economies, benefiting from a half-decade of painful private-sector deleveraging (households, banks, and non-financial firms), a smaller fiscal drag (with the exception of Japan), and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9%.

Moreover, so-called tail risks (low-probability, high-impact shocks) will be less salient in 2014. 

The threat, for example, of a eurozone implosion, another government shutdown or debt-ceiling fight in the United States, a hard landing in China, or a war between Israel and Iran over nuclear proliferation, will be far more subdued.

Thursday, January 9, 2014

US to grow faster than emerging markets 2014

The global economy will grow faster in 2014, while tail risks will be lower. But, with the possible exception of the US, growth will remain anaemic in most advanced economies, and emerging-market fragility—including China’s uncertain efforts at economic rebalancing—could become a drag on global growth in subsequent years.

Wednesday, January 8, 2014

China risks hard landing

Despite the reforms set out by the Third Plenum of the Communist Party’s Central Committee, the shift in China’s growth model from fixed investment toward private consumption will occur too slowly.

Many vested interests, including local governments and state-owned enterprises, are resisting change; a huge volume of private and public debt will go sour; and the country’s leadership is divided on how quickly reforms should be implemented.

So, while China will avoid a hard landing in 2014, its medium-term prospects remain worrisome.

Monday, January 6, 2014

Faster growth in emerging markets, China risks on

Emerging economies will grow faster in 2014 – closer to 5% year on year – for several reasons. Brisker recovery in advanced economies will boost imports from emerging markets. The Fed’s exit from QE will be slow, keeping interest rates low.

Policy reforms in China will attenuate the risk of a hard landing. And, with many emerging markets still urbanizing and industrializing, their rising middle classes will consume more goods and services.

Thursday, January 2, 2014

Fed's commitment to QE

In spite of the Fed’s impressive commitment to aggressive monetary easing, its effects on the real economy and on U.S. equities could end up being smaller and more fleeting than the effects of previous QE episodes. - in RGE

Wednesday, January 1, 2014

Roubini on China's coming slowdown

But a hard landing becomes more likely as the stimulus fades, nonperforming loans rise, the investment bust accelerates, and the problem of rolling over the debts of provincial governments and their special investment vehicles can no longer be papered over. - in Irish Times