Growth or stagnation? A world tour

Is the global crisis behind us? The divergent development of major emerging countries, Europe and the United States reminds us that despite a strong tendency for unification during the past two decades, despite our growing interdependence, the world economy is still highly fragmented. Under the circumstance, it doesn't make sense to draw a general picture without taking a closer look at these differences: between emerging and advanced countries, between the United States and Europe, and even within Europe itself.

ParisTech Review – The impression spreads throughout the world, especially in Europe, that economic growth could remain sluggish for many years, a sort of “remake” of the Japanese stagnation of the 1990s. Is this a likely scenario or will growth take off again in 2015?

Eric Chaney – It is quite difficult to identify the factors that could cause an acceleration of global growth in 2015. Growth could vary depending on the country, but the global trend is around 3.25% if we consider GDP computed on the basis of purchasing power parities. That’s very little, compared to the 4.4% average between 1993 and 2008. If Europe is waiting to be driven out of its stagnation by global growth, it is a serious delusion. Growth will meet the expectations only in the United States and China.

The Eurozone is exposed to the greatest risk of stagnation.

If we only consider advanced economies, the differences are growing not only between Europe and others, but also within Europe. Countries that are doing well are small, open economies such as Switzerland or Sweden. Both have by far exceeded their GDP level of 2008.

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