This article is very interesting and explains why the IMF has recently released a forecast showing slower GDP growth than it did before. In explaining the predicted decline chief economist Maurice Obstfeld proclaimed that the biggest threat to the economy is coming from "non-economic risks". The risk that he is referring to stems from the political spectrum of the economy. He notes that any slide in GDP tends to lead to lower investment which leads to high political tensions. The article notes that Brazil exemplifies the problem of how a bad economy can be made worse by political paralysis. Other political factors are present today such as the possibility of Britain leaving the EU and the refugee crisis that is putting pressure on the EU's border policies. Only time will tell how global issues like these will affect the economy, but it seems apparent through this article that political upheaval certainly will not lead to a healthy world economy.
http://www.economist.com/news/finance/21696883-fund-sees-danger-economic-doldrums-imf-downgrades-global-growth
This article is interesting and really shows the complexities and interconnectedness of the global marketplace. Today, especially, there are so many moving parts and variables concerning a nation's economy that it is clear the productivity is not only receptive of economic fluctuations yet also political and consumer fluctuations. What I found to be very important was that the article mentioned the fact that changes in investment really demonstrated a countries' productivity which is something that we have seen in class and also is illustrative of some of the more recent recessions we have learned about.
ReplyDeleteI agree that the political bureaucracy can be a hinderance to economic progress. However, I believe that the EU border policies are a continental issue that must be dealt with. I believe that the refugee issue in Europe will continue to worsen and have a profound effect on the EU economy.
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