WCA July 2015

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Wire & Cable ASIA – July/August 2015
From the Americas
The world
A close study of the latest International
Monetary Fund global economic
forecast is more encouraging than
the IMF will allow
Even good news, when generated by the International
Monetary Fund, is delivered with an implied worried frown.
So it was in mid-April, as finance ministers and central
bankers from 188 countries converged on Washington for
the combined IMF-World Bank spring meetings.
On 13th April the IMF released a forecast of continuing
recovery in the Eurozone and growth in the US economy
of 3.1 per cent this year, handily outpacing the 2.4 per
cent of 2014. The outlook for the broader global economy
was even sunnier: expansion by 3.5 per cent this year and
3.8 per cent in 2016.
But the tone of these tidings was typically guarded and
cautionary. At a news conference, IMF Economic Counsellor
Olivier Blanchard characterised this year’s growth as
“moderate and uneven.”
David Marsh, chairman of the Official Monetary and
Financial Institutions Forum (OMFIF), a London-based think
tank that promotes dialogue on world finance between
private-sector and public institutions, decided to issue a
corrective in advance to “the gloom [that] will be on plentiful
display in Washington.” Here, abridged and lightly edited,
are the main points in an article he prepared for USA Today
(“Five Reasons to Be Upbeat on the World’s Economy,”
13th April):
 The US is powering its way to recovery, with a generally
favourable influence on the rest of the world. Sound
fiscal policies and appropriate monetary easing by the
Federal Reserve have brought down US unemployment
to 5.25 per cent and will sooner rather than later
generate a healthy normalisation of American interest
rates.
 The fall in oil prices is almost universally good news for
the world economy. Yes, it has imposed retrenchment
on some prime oil exporters; but most oil producers
have the reserves to overcome the setbacks. Oil
importing countries, which include a large number of
poorer developing nations as well as much of Europe,
are huge beneficiaries of the moderate prices.
This period of price benevolence will be extended at
least a year or two by the wish of Saudi Arabia and
other leading exporters to keep pumping out oil, as well
as the relative buoyancy of USA shale production.
 News from emerging market economies is positive
despite their slower growth. The slowdown in China will
put that economy on a more sustainable path, driven by
domestic consumption rather than exports.
India is on a more stable growth trajectory under a
new prime minister. Brazil and Russia are accustoming
themselves to sharp declines in activity.
Nigeria, the leading economy and most populous state
in Africa, has just held a general election – a sign of
democratic maturity likely to rekindle economic activity
that could reverberate throughout Africa.
 The strong American dollar has been a boon for most
countries. It may be holding back USA exporters and
depressing foreign earnings, but dollar strength is
normally good for the world economy. Many countries
can gear up for higher exports and their companies earn
more abroad.
As the world’s leading transaction and reserve currency,
the greenback spreads confidence internationally. The
decision by the Chinese leadership to let the renminbi
follow the dollar upward and become, in time, a reserve
currency, is a wise move. For one fewer cause of
tension in the world, the US Congress no longer terms
China a currency manipulator.
 Modest growth is resuming in Europe, home to many of
the world’s most technologically adept companies and
much research and development brainpower. For the
time being at least, the European Central Bank’s policy
of quantitative easing – buying up government bonds to
punch up the money supply and ward off deflation – is
adding to the momentum of a recovery that was already
underway at the turn of the year.
Of related interest . . .
 The managing director of the International Monetary
Fund is by tradition a European. But, according to
Mr Marsh of OMFIF, the odds are narrowing that Christine
Lagarde, of France, whose term is up in 2016, will be
replaced by a candidate from Asia or Latin America.
He wrote: “The more the developing countries can use
the tailwinds in the world economy in their own favour,
the greater will be likelihood of a landmark decision that
takes account of the international economic shift toward
the emerging world.”
A comparison of the world’s passports
discloses wide variances in freedom of
choice among destinations
“A passport from a country on good diplomatic terms with
its peers is a powerful tool, allowing holders to travel across
borders with ease.”
Sophia Yan of CNNMoney also noted that ease of
movement is a speciality of the Canadian firm Arton Capital,
which helps wealthy individuals obtain multiple citizenships,
sometimes through immigrant investor programmes. On the
basis of the number of countries that can be visited without
a visa, or by getting one upon arrival, the Montreal-based
company has ranked the world’s passports according to
the global mobility they afford the holder. (“These Are the
World’s Most Powerful Passports,” 17th April)
Tied for first place are USA and UK passports, which give
holders access to 147 countries, Ms Yan reported.
BigStockPhoto.com Photographer: Aispl