Is the Global Economic Recovery About to Grind to a Halt?

MARTIN WOLF waxes optimistic about the future of emerging markets:

Caroline Freund, Mélise Jaud, 24 January 2013The Arab world is undergoing a major political transition. The final outcomes of the changes are far from certain. Nevertheless, there have been and will continue to be economic consequences from the moves towards democracy. This column looks at 90 attempts at transition and finds that countries with rapid transitions, irrespective of whether they are successful or failed, experience swift recoveries and a long-run growth dividend of about one percentage point relative to pre-transition growth levels.

EARLY last year, the American economy seemed to find its footing at last. American GDP growth rose to its best quarterly growth rates of the recovery. The long drop in employment came to an end, and payrolls started rising again. The worst finally seemed to be over. But trouble hit. Petrol prices rose by a third in the first 5 months of the year. In April, a brewing European sovereign-debt crisis led to an outbreak of financial-market panic and rattled confidence. And a long spring and summer swoon ensued, during which it became clear that the recovery was in serious danger.

Sumit Roy submits:EnergyCrude oil prices plummeted 8.6% last week as global economic slowdown fears took center stage. It was only Monday that oil was trading as high as $79.38, but as the negative news mounted, oil kept slipping; prices fell in each of the last five sessions.

Jeffry Frieden, Professor of Government at Harvard, has a new Council of Foreign Relations working paper "Global Imbalances, National Rebalancing, and the Political Economy of Recovery" : Global macroeconomic imbalances -- massive borrowing by some countries and massive lending by others -- drove the financial boom and bubble that eventually burst into the current crisis.

Gosh, just when big global retailers were starting to make us feel warm and fuzzy with their comforting predictions that the recession has bottomed out, along comes the International Monetary Fund to put us back on Prozac.

Impacts, Transmission and Recovery. This was the topic of a conference I recently attended, sponsored by the Korean Development Institute and the East-West Center. It was a great opportunity to hear diverse views on the progress of the world economy. The papers are here. Rather than discussing all the papers, I want to highlight a few papers that had particular salience for me.