March 8, 2016/IMF

Let me start by thanking the National Association for Business Economics and Tom Beers for inviting me to speak to you today.
At the recent G20 meeting in Shanghai, countries recognized the challenges facing the world economy, acknowledged that the recovery remains too weak and uneven, and recognized the downside risks. The meeting’s message provided some reassurance that countries stand ready to act if necessary. Today I want to make the case for action now.

The IMF’s latest reading of the global economy shows once again a weakening baseline. Moreover, risks have increased further, with volatile financial markets and low commodity prices creating fresh concerns about the health of the global economy.

These concerns are partly being fed by a perception that policymakers in many economies have run out of ammunition or lost the resolve to deploy it. For the sake of the global economy, it is imperative that advanced and developing countries dispel this dangerous notion by reviving the bold spirit of action and cooperation that characterized the early years of the recovery effort.

What is needed is a three-pronged approach through monetary and fiscal policies, as well as structural reforms to strengthen the baseline and guard against the risks. In addition, collective global action should play a supporting role in helping leverage individual country action and seeking to make the international monetary system more stable and hence supportive of growth.

1. Global Economic Outlook

What do we know so far?
The weak recovery is taking place in the context of unresolved legacies. In many parts of Europe, for instance, sovereign and private sector balance sheets remain highly leveraged and banks’ non-performing loans high. In the US, aging-related spending pressures and unfulfilled infrastructure needs diminish economic prospects. And in Japan, deflation is putting the recovery at risk.
At the same time, we are witnessing an emergence of new risks. The global economic slowdown is hurting bank balance sheets and financing conditions have tightened considerably. In emerging markets, excess capacity is being unwound through sharp declines in capital spending, while rising private debt, often denominated in foreign currency, is increasing risks to banks and sovereign balance sheets.

Concerns about the global outlook have weighed heavily on world financial markets. The decline in equity price indices in 2016 so far this year has averaged over 6 percent, implying a loss of global market capitalization of over US$ 6 trillion (or 8.5 percent of global GDP). This is roughly half the US$ 12.3 trillion loss incurred in the most acute phase of the global financial crisis. Some Asian markets, such as in China and Japan, have been particularly hard hit, with losses of over 20 percent since the beginning of the year. Meanwhile, emerging market currencies have weakened, while their sovereign credit spreads have continued to widen—in Latin America and Africa by over 300 basis points over the past year.

What may be most disconcerting is that the rise in global risk aversion is leading to a sharp retrenchment in global capital and trade flows. Last year, for example, emerging markets saw about $200 billion in net capital outflows, compared with $125 billion in net capital inflows in 2014. Trade flows meanwhile are being dragged down by weak export and import growth in large emerging markets such as China, as well as Russia and Brazil, which have been under considerable stress.
Furthermore, inflation has fallen to historical lows. Headline inflation in advanced economies in 2015, at 0.3 percent, was the lowest since the financial crisis, and in emerging markets core inflation remains well below central bank targets.

Why should we be concerned about these developments?

First, because protracted low global demand, and adverse feedback loops between the real economy and markets may generate additional deflationary pressures, putting us at risk of secular stagnation. Second, and equally relevant, is that labor supply and labor productivity growth have fallen considerably over the past decade, further aggravating these adverse dynamics.
While some aspects of the weak recovery are clear, we and many others in the policy world and in the markets are still debating and analyzing the role and the severity of several key transitions now underway:

• How will China’s transition—with the deceleration in export oriented manufacturing activity and a pickup in sectors satisfying household demand —alter patterns of global trade and investment?
• Will the transition to lower oil and commodity prices be a plus, as predicted, or a minus? The expected pickup in consumption in commodity importers has been weaker than expected, possibly reflecting continued deleveraging in some of these economies and a limited pass-through of price declines to consumers. At the same time, declining prices have reduced investment in extractive industries, pushed some producers to or beyond the edge of profitability, and weighed on growth prospects for commodity exporting countries.
• Will geopolitical tensions, the related refugee crisis, and global epidemics further increase uncertainty and weigh on economic activity?

“Policy Imperatives for Boosting Global Growth and Prosperity”

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By InvestAdvocate

Lagos (INVESTADVOCATE)- Aliko Dangote, has emerged the 51st richest man in the world and still the richest man in Africa for the sixth consecutive time with net worth of $15.4 billion, according to Forbes latest ranking in 2016.

Dangote has diverse investment in sugar, cement, flour and beverage among others last year, ranked 37th richest in the world with a net worth of $25 billion.

Mike Adenuga, chairman, Globacom Group is another Nigerian on the list, he ranked 103rd, with wealth valued at about $10 billion.

On the overall, Bill Gates topped the list for the 17th time in 22 years, with net worth of $75 billion, which has put him in the top spot of the list of Forbes’ World Billionaires for the third consecutive time, after overcoming Mexico’s Carlos Slim Helu in 2014.

Also, Amancio Ortega, Spanish clothing retailer and founder of the Zara brand of stores, , came second with a net worth of $67 billion and Warren Buffet, stock market investors and American investment mogul came third with a net worth of $60.8 billion to complete the top three richest people, according to Forbes.

Donald Trump, America’s Republican presidential candidate and real-estate investor is ranked 324th. Forbes estimated his net worth at $4.5 billion.

According to Forbes, the world billionaire list also had a feel of the global economy crisis as the number of billionaires is said to have reduced by 16 from record 1,826 in 2015 to 1,810 in the review period.

Forbes also revealed that the aggregate net worth was $6.48 trillion, $570 billion less than that of last year.  It was also the first time since 2010 that the average net worth of a billionaire dropped – it is now $3.6 billion, $300 million less than last year.

Mark Zuckerberg, founder of social media network, Facebook, , had the best year of all billionaires, adding a whopping $11.2 billion to his fortune and moved up to sixth from 16th position in 2015.

Worthy of note is the emergence Alexandra Andresen, a 19-year-old Norwegain heiress who is now reputed to be the youngest billionaire in the world has a 42 percent stake in her family’s business and worth $1.2 billion.

Forbes disclosed  the United States has 540 billionaires, more than any other country in the world and followed by mainland China with 251 (Hong Kong has another 69) and Germany with 120.  Russia has 77, ten-figure fortunes, 11 fewer than last year, while Brazil is down to 23 from 31.

Click here to view list of Forbes 2016 World’s Billionaires

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Foreign direct investment flows to Africa increased nearly 7 percent to an estimated $56 billion last year, nearly a fifth of which went to top recipient South Africa, a United Nations report said on Tuesday.

Africa, along with Latin America and the Caribbean, helped drive FDI inflows to developing economies to a new high of $759 billion in 2013. That was more than half of global FDI, the United Nations Conference on Trade and Development said in its latest Global Investment Trends Monitor.

Sub-Saharan Africa’s robust economic growth, which the IMF expects to increase to 6.1 percent in 2014, from 5.1 percent last year, has made it an attractive destination for investors.

South Africa’s performance has lagged the rest of the region, however, with the IMF forecasting growth of 2.8 percent in the continent’s biggest economy this year, an increase from 1.8 percent in 2013.

Investors have also been unnerved by recurrent labour unrest, most recently a platinum mining strike that began on Thursday which has hit half of global output of the precious metal.

Despite these woes, FDI inflows to South Africa more than doubled to $10.3 billion in 2013, UNCTAD said, while other African countries like Nigeria and Ghana saw a decline in investment.

Most of the rise in FDI flows to South Africa was due to greenfield, or new investment, particularly in the consumer goods sector, said Masataka Fujita, head of UNCTAD’s investment trends and issues branch.

Mozambique, where companies like Brazil’s Vale, London-listed Rio Tinto and Italy’s Eni are developing huge offshore gas and coal deposits, was another strong performer, attracting inflows of $7.1 billion, up more than 30 percent from a year ago.

Inflows to Africa’s top crude oil producer Nigeria declined about 20 percent to $5.5 billion, the report said, largely due to asset sales by foreign oil companies such as Royal Dutch Shell and Chevron.

Source: Reuters (by tosin Sulaiman)

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