Oleg Ignatkin: Economic recovery in the Era of Globalization - Problems Remain?
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Modern economic world is buoyed by new transnational growth. We might witness world economic growth of 1-2%, with IMF and World Bank being preoccupied less with the economy, and more with the political processes (political instability, emerging markets’ growth less than expected, unstable world oil pricing). But the worldwide recession seems to be overcome. Debt stabilization and high-concerned mid-term indicators still show the gravity of the crisis passed, yet positive “green shoots” are likely to persist.
Recession unleashed (2008-2009).
High leveraged European financial institutions combined with singularized speculative bubbles in the number of European countries (Aggravated debts in Iceland, bloated budget and political mismanagement in Greece, speculative debacles in Ireland, construction crises in Spain as well consequences of bank deregulations in Germany, the U.S. and Britain) seemed to contribute to the lagging long business-cycle slump in 2008-2009. “Global Recession” gripped media –attention with riveting negative analysis and negative forecasting. Though highly distributed, it doesn’t represent major problems for the future with right analysis. Below there is a number of reasons about it.
High - leveraged banking debt: actually this is the core issue, since European banks have been the leaders of the debt-speculative economy. Debt can be good and bad. Depending on investments, smart approaches towards global economy developments it can assume a more positive role, since global economy is highly underinvested.
Over-production crisis has been persistent since 1990th but with underdeveloped global market it should not be such a great problem.
Provision of the combined growth – is highly important in the current situation, because governmental help has not been so far sufficient, and many companies indeed suffered. Global underinvestment may require a lot of efforts in the modern world economy but, globalization hasn’t so far unleashed its full potential.
Crisis-proof regulators – are highly necessary. Since 1980th global economy has undergone a number of huge crises, meaning, that some regulation is needed, preferably of Keynesian type.
Oleg Ignatkin, Associate professor, PhD. Department of Foreign policy and area studies.
