Economic Quarterly Report Dutch version
The global economy will continue to grow at around 3 per cent this year and next. Possibilities for boosting the economy through budgetary or monetary policy are limited, while political developments mean that effective economic policy is unlikely.
A balance of payments crisis is unlikely in today’s Asia. Most countries have improved their current accounts and FX reserves. The rising debt load may however pose problems, although it nowadays is mainly local currency denominated.
Strong economic growth has diminished poverty in the region and will swell the ranks of the middle class. But corruption levels are high, China’s influence in the region is increasing and the dispute surrounding the South China Sea may generate stability risks.
Demographics will provide headwinds in the developed countries of APAC and China, and tailwinds in South Asia. While total factor productivity growth has fallen, the innovation outlook for the APAC region is still relatively favourable.
Discussions today are about how far down future interest may go, though it is unclear how this helps the real economy. What we need is a big reset: a coordinated normalization of the monetary situation, combined with a sizeable net fiscal stimulus.
Special Dutch version
While there will be a devaluation of the Chinese renminbi, the dollar will also become stronger more generally in 2016, due in part to the Fed’s interest rate increases. The ECB is more likely to do the opposite, which will weaken the euro/dollar currency pair further still. Slightly higher capital market rates can be expected though.