The Global Economy in Turbulent Times

CHAPTER 70 The Yuan Way to a New Monetary Order¹

Chinese New Year has come and will soon go. The eurozone debt crisis is well past two years. Yet uncertainty persists. The World Bank’s January 2012 “Global Economic Prospects” reports: “World economy has entered a very difficult phase characterized by significant downside risks and fragility . . . and as a result, forecasts have been significantly downgraded. . . . However, even achieving these much weaker outturns is very uncertain. . . . Overall, global economic conditions are fragile.”² This week’s International Monetary Fund (IMF) January 2012 World Economic Outlook Update says more of the same: “The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere.”³

China, India, South Africa, and Brazil have entered a slowing phase. No country and no region can escape the consequences of a serious downturn. Nevertheless, growth in the East Asia and Pacific region (excluding Japan) is expected to slow down to about 7.8 percent in 2012 (8.4 percent in 2011) and stabilize in 2013. This reflects continuing strong domestic demand (evident in the third quarter of 2011 gross domestic product [GDP]), while exports will slow to about 2 percent due to Europe heading toward recession and sluggish rich Organisation for Economic Co-operation and Development’s (OECD) demand.

The middle-income nations are, I think, in a good position to weather the global slowdown, with significant space available for ...