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August 6 - August 18, 2017
Elie Wiesel, the writer and Holocaust survivor, said the opposite of love is not hate; it is indifference.
long runs of sustained growth are rare. And the faster an economy booms, the shorter its growth run is likely to be.
Economies—both emerging and developed—that managed to grow at 6 percent a year would typically sustain that pace for four years in a row, those that grew at 8 percent would maintain that speed for three years, and a 10 percent rate normally lasts for two years.
it makes national leaders too complacent to keep pushing reform and attracts more foreign capital than the country can handle.
the global media’s love is a bad sign for any economy, and its indifference is a good one.
Hype about the next hot economies has been proven consistently wrong.
In the Internet age, there is no single, iconic measure of mainstream opinion.
the single strongest conclusion of postwar research on economic growth is that all economies tend to “regress to the mean,” or fall to the historic mean GDP growth rate for all countries.
Institutions like the IMF and the World Bank have been issuing forecasts that feed positive media hype for emerging economies, whether they were hot or not, and have “an especially difficult time predicting turning points.”
This ingrained cheeriness is evident in the IMF’s long-standing reluctance to forecast recessions.
I suspect that the IMF and the World Bank have a special reason for optimism bias: Many of the countries for which they make forecasts are also essentially their clients. Political elites in those countries would take offense at brutally honest assessments of their economic prospects. I see the same pressures weighing on many independent economists, particularly as emerging nations have grown in clout and reach in recent years.
By the middle of the decade, the average growth rate in emerging nations had fallen from a peak of 7.5 percent in 2010 back down to its long-term average of 4 percent, and to around 2 percent excluding China.
The biggest enemy of high prices is high prices, as producers ramp up investment in new supplies.
The truth, however, is that “development traps” can knock countries off track at any income level.
The researchers found that economies get bogged down at many income levels, not just at the barrier between middle and high incomes.
In any decade, more nations on average fall back to a lower income level than advance to a higher one.
strong growth shows little “persistence.”
booms tend to be “extremely short lived,” dying out after a median duration of nine years, and “nearly always” ending in a significant slowdown.
growth superstars in any decade generally arise from relative poverty and the obscurity that goes with it.
This list of the world’s fastest-growing economies by decade is remarkable for its number of unsung stars, and for the rate of churn.
More often than not, countries are at the verge of disappearing from the list when the global media are most in love with them,
and they are preparing to join the list when they are in the shadows.
Economies are most likely to turn for the better not during the period of hate but when the media have moved on to the next story, leaving the crisis-hit country alone to work on cleaning up its mess.
The Economist is an exception to the general rule that magazine covers tend to point in the wrong direction,
Most important, remember that the longer a growth spurt lasts, the less likely it is to continue.
It is after these crisis-struck nations fade from the media glare and join the ranks of the forgotten countries that they are likely to emerge as the next success stories.
India’s growth rate is probably overstated, the result of dodgy new accounting methods used by the national statistics bureau.
The single most reliable indicator I have found is the negative one on the kiss of debt rule,
In other post-crisis environments, the electorate may demand something more like retribution, rather than reform, if they are angry over rising inequality or fearful of foreign threats.
Political uprisings demanding wealth redistribution are most likely in nations where billionaires not only dominate the economy but draw their wealth mainly from political and family connections.
Strong investment in supply networks—ports, phone systems, factories—allows an economy to grow rapidly without high inflation, the ideal combination.
Though Brazil does have a small niche of well-known and globally competitive industrial companies, they are the exception to its overwhelming dependence on commodities.
Brazil has not changed course enough to rise out of the ugly class, but it has lifted itself off the bottom, mainly due to the rapid fall of its currency and the sudden evaporation of hype
Mexico is thus the rare case of an economy reducing its ties to petroleum,
The geography rule rewards nations that promote regional balance in growth, and few countries are spreading the wealth across provinces better than Mexico.
falling commodity prices help South Asia, where all the economies are commodity importers.
In 2015 South Asia had the highest concentration of accelerating economies in the world.
The whole region is emerging as a geographic sweet spot.
Since 2010 India has implemented over five hundred protectionist measures, more than any other country in the world according to the Centre for Economic Policy Research, a nonprofit network of economists based in Europe.
in ten out of the twelve major emerging-market currency crises going back to 1990, local investors headed for the exits well before foreigners.
China’s economic growth path has come to resemble a ping-pong ball bouncing down stairs, popping up when the government rolls out new stimulus measures, only to fall to an even lower level.
Whether it has a crisis or not, China’s economic growth prospects now rank among the ugliest in the emerging world.
Forty-four countries now rely on China as their main export market, up fourfold since 2004, compared to thirty-one that rely mainly on the United States.
Today every one-percentage-point slowdown in China’s economy reduces global GDP growth by nearly half a percentage point, with emerging markets bearing the brunt.
The developed economy with the most sharply deteriorating prospects is an Asian neighbor, Australia.
As debts mounted in recent years, Australia was investing heavily, but mainly in real estate and commodity industries like iron ore, not in factories first.
During the boom years in Australia, wages rose sharply, as did the value of the Australian dollar, which undercut the competitiveness of what few factories the country had left.
Its billionaire class controls vast wealth but generates the majority of it in the kinds of productive industries that are most likely to generate good jobs and least likely to generate a political backlash against growth.
Growth is powered to a large degree by the financial service industries in London, which accounts for 20 percent of the economy.
Tales abound of students from China and Russia renting London apartments at monthly rates higher than the average yearly income in the UK.
