Global Economy

Next couple of weeks will see quick political engagements across the globe for securing funds for the second bailout package for Greece. This time the EU leaders are chasing the present heavyweights of the global economy, especially the emerging countries to mobilize funds for the $170 billion aid package to Greece. The US has already indicated that it will not contribute to the IMF to finance the bailout. Hence, the EU leaders are working hard to secure money from China, Japan, India and other emerging countries to finance the next phase of the Greek bailout. The EU leaders in their plan of disbursing the stressed Greek assets all over the world using the IMF window, implic

India may not contribute to the IMF sponsored efforts to fund the next phase of Greek bailout. A hint on this is visible from the fact that Finance Minister Pranab Mukherjee will not be participating in the coming G20 meeting of the financial ministers scheduled to begin on February 24 in Mexico City because of the Budget preparation work at home.   India’s reluctance to join the IMF lead bailout initiative is to be read along with the attitude of other major G20 countries. On the previous day, Japan and China decided to contribute to the Euro-zone rescue efforts. The Japanese Finance Minister Mr. Jun Azumi hinted that Japan and China are ready to put money into the IMF

                                                                       One can easily observe that the economic weight of Asia is rapidly increasing. Of the six largest economies of the world, three are in Asia, and of these two, China and India, are the fastest growing economies of the world. During the last few years, the world economy has been moving forward driven by the growth rate of these two most populous emerging markets. Performance in terms of growth rate, GDP size, trade share, industrializati

The newly built African Union Head Quarters at Addis Ababa now can be seen as a monument of China’s increasing engagement in the continent. The head quarter has been freely built by China spending $200 mn. China’s effort to make stronger relationship with Africa by using money power comes at ‘its’ right time when most of the developed countries are in financial turmoil.     Main purpose of China’s exercise is to consolidate its economic engagement with Africa. China is buying large number of African assets especially resource and mineral based assets over the last one decade. Security of critical resources is important for China to feed

Japan’s trade deficit in the last year is the first annual one since 1980. The country, known for its electronic exports, has registered a trade deficit of $32 billion in 2011. Immediate reason for the Asian giant’s unusual trade deficit is the large volume of oil imports that was necessitated after the quake-resulted nuclear energy crisis.                 Strong yen for most part of 2011 also contributed to the deficit. People have invested heavily in yen because of the Euro crisis. On the export front, factory output came down; supply chains for MNCs like Toyota and Sony have broken resulting

Talking about financial crisis became boring and out-fashioned especially since the last two- three years. Business world became engulfed with despair than hope, as crisis happens in a series mode. In the context of the perpetuating crisis, this years’ Davos WEF meeting has a more fundamental topic to discuss- the relevance of capitalism. Indeed, the discussion on the topic is quite irrelevant because of the unavailability of alternative economic systems. Recession, brewing inequality, job losses, corporate greed, public protests, new problems and diseases are appearing without getting solutions to the existing problems. Policy makers and governments are not successful in en

Another like minded group is emerging within the WTO. This time it is against   legitimizing the practice of ‘zeroing’. India and fifteen others have joined forces to defeat an attempt made by the World Trade Organisa­tion (WTO)'s committee on rules to legitimize a process called zeroing. The practice of zeroing will al­low the US to impose high anti-dumping duties on oth­er countries. Many LDCs argue that zeroing will ignite neo-protectionism.  The countries against this practice submitted a joint repre­sentation to the WTO.  The coalition against the zeroing includes Brazil, China, Japan, Hong Kong, New Zealand, Norway etc.  

In the wake of the eroding economic borders for capital mobility, capital flows are going to be faster and in greater volume in the coming years – predicts McKinsey. By 2010, financial assets are expected to touch a new high and global capital flows are expected to touch $213 trillion. This volume means an an­nual growth of 8.75 % when compared to the previous five years, says McKinsey’s re­port on global capital flows. The OECD countries comprising European countries, the US and Japan are the owners of around 83% of the world's financial capital. The report points out the declining role of Japan in global capital flows. Japan is overtaken by China in the case