Macroscope | Heed the warnings of a global economic crisis from those in the know – and ignore those saying everything’s fine
- Don’t be distracted by the siren voices of analysts reassuring that all is well with the global economy
- Rather, listen to the likes of the IMF, World Bank and Asian Development Bank, whose top officials know what’s really going on
Those who really know what’s going on in the global economy and those from the world of finance and markets often seem to inhabit parallel universes – one, where practitioners have to deal with real-world problems, and the other, where the priority is to spin a plausible yarn.
This dichotomy has never been more apparent with leaders of multilateral institutions warning in ever stronger terms of impending food, fuel, finance, climate change and other crises, while market analysts talk blithely of inflation peaking and markets recovering.
Why should it matter what market commentators and financial analysts think or say, provided that those in government and other official organisations are aware of what needs to be done? They, after all, are the policymakers or “doers” and not just “sayers”.
It matters a lot. Financial markets are places where a nation’s savings are pooled, and in vast amounts in market economies. If the message being fed to savers and investors is that all is well with the world when it isn’t, then we have “market failure”.
Consider the very different kind of message delivered recently by people like International Monetary Fund managing director Kristalina Georgieva, World Bank president David Malpass (both at the G20 meeting) or by Asian Development Bank chief economist Albert Park (at the Foreign Correspondents’ Club of Japan).