The Global Economy in Turbulent Times

CHAPTER 150 The Goat Straggles into 2015 amid Rising Risks¹

2015 is the year of the lunar wood goat—renowned for moderation. In mid-November 2014, the world’s most powerful economies pledged in Brisbane: “to lift G-20’s GDP by at least an additional 2 percent by 2018. . . . If fully implemented, . . . this will add more than US$2 trillion to the global economy and create millions of jobs.”² Brave words indeed after acknowledging: “The global recovery is slow, uneven and not delivering the jobs needed. . . . Risks persist, including in financial markets and from geopolitical tensions.” G-20 emphasized that the extra 2 percent would be met only if Europe starts pumping billions into the stalling eurozone, given that Germany and France had just only narrowly avoided recession amid slowdown in most emerging economies, including China. It is clear the global economy is in for a rough ride. After all, the International Monetary Fund (IMF) had just trimmed world growth in 2014 to 3.3 percent.

Oil’s Slide

For once, the betting is for plummeting oil prices to give an overall boost to the global economy by delivering a windfall to consumers and manufacturers, especially in countries with high-energy tabs. It is as though the world was given a significant tax cut. While part of the benefit will go to governments because of the way oil is being taxed (particularly in Europe) or used to subsidize (such as Malaysia and Indonesia), the overall global impact will be to boost consumption ...