Crises Swamping Developing Economies

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By Martin Khor* | IDN-InDepth NewsAnalysis

GENEVA (IDN) - Several developing countries are now being engulfed in new economic crises as their currency and stock markets are experiencing sharp falls, and the end is not yet in sight. The “sell-off” in emerging economies has also spilled over to the American and European stock markets, thus causing global turmoil.

Countries whose currencies were affected of late include Argentina, Turkey, Russia, Brazil and Chile. A hike in interest rates by Turkey and South Africa has so far failed to stem the depreciation of their currencies. An America market analyst termed it “emerging market flu” and several global media reports tend to focus on weaknesses in individual developing countries.

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World Economy Growth Remains Interdependent

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By J C Suresh | IDN-InDepth NewsAnalysis

TORONTO (IDN) - A new report has underlined the interdependence of the world economy, which is expected to strengthen in 2014 with growth picking up in developing countries and high-income economies appearing to be finally turning the corner five years after the global financial crisis.

According to the World Bank’s Global Economic Prospects (GEP) report, the firming of growth in developing countries is being boosted by an acceleration in high-income countries and continued strong growth in China. However, growth prospects remain vulnerable to headwinds from rising global interest rates and potential volatility in capital flows, as the United States Federal Reserve Bank begins withdrawing its massive monetary stimulus.

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Uncertainty Haunts World Economy In 2014

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By David Dapice* | IDN-InDepth NewsAnalysis

MEDFORD (IDN |Yale Global) - As the year that saw the world’s strongest economy brought to the precipice of a default comes to a close, and many wonder if 2014 promises more stability? Judging by most forecasts, including that of the International Monetary Fund, the global economy may grow about 3.5 percent, but confidence in that forecast is subject to more than usual hedging due to several policy unknowns and uncertainties.

As unemployment in the developed world remains steady and growth in the emerging economies dependent on lackluster performance of the industrialized economies, a question mark hangs over economic prospects worldwide.

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Developing Economies’ Myths and Realities

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By World Economy Desk | IDN-InDepth NewsAnalysis

BERLIN (IDN) - The South Centre, an intergovernmental organization of developing countries, has good news about developing economies. Contrary to the view promoted by ‘establishment institutions like the IMF’ (International Monetary Fund), recent events show that major developing countries have not “decoupled” their economies from those of advanced ones, avers Yılmaz Akyüz, chief economist of the Geneva-based organization.

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Controversy on Landmark Global Trade Accord

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By Martin Khor* | IDN-InDepth NewsAnalysis

GENEVA (IDN) - Negotiations for the Trans Pacific Partnership Agreement (TPPA) have been proceeding at full speed in recent months, giving rise to a lot of interest worldwide. The stated goal is to conclude the negotiations by the end of 2013. However there is only a slim prospect for this, as there are still many contentious issues to resolve.

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From US Shutdown To A De-Americanized World?

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By Martin Khor* | IDN-InDepth NewsAnalysis

GENEVA (IDN) - The world waited with bated breath as the deadline neared. And breathed a sigh of relief when at the last minute the United States avoided crossing its “debt ceiling” and a default on its debts.

The debt ceiling was raised, and the government shutdown also ended, after weeks of a high-profile standoff between U.S. President Barrack Obama and the Republicans in Congress. But this relief was mixed with incredulity and frustration.

Firstly, the respite is only temporary; the can is just kicked down the road. The deadlines for government shutdown and debt ceiling are shifted some weeks away to January and February 2014.

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Rising Migrant Remittances Highly Significant

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By J C Suresh | IDN-InDepth NewsAnalysis

TORONTO (IDN) - A new report has highlighted the importance of funds remitted home by migrants, which are now nearly three times the size of official development assistance given by rich developed nations and larger than private debt and portfolio equity flows to developing countries. They exceed the foreign exchange reserves in at least 15 developing countries, and are equivalent to least half of the level of reserves in over 50 developing countries, says the latest issue of the World Bank’s Migration and Development Brief.

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Effective Financial Regulations Still Missing

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Five years have passed since the Lehman Brothers collapse triggered U.S. and global financial crisis with grave consequences. But effective financial regulations are not yet in sight in developed countries. At the same time, the developing countries are confronted with huge new challenges.

By Martin Khor* | IDN-InDepth NewsViewpoint

GENEVA (IDN) - Lehman was the tip of the iceberg. Below the surface were many contributory elements. They include financial deregulation, the conversion of finance from serving the real economy to a beast that thrived on speculation, creaming layers off the productive sectors and unsuspecting consumers through new manipulative instruments.

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U.S. Economy Makes The World Go Round Or Rot

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By J C Suresh | IDN-InDepth NewsAnalysis

TORONTO (IDN) - Though the world is increasingly intertwined, the U.S. plays a unique role in the global economy, accounting for 11 percent of global trade and 20 percent of global manufacturing. The country’s global financial ties also run deep. Foreign banks hold about $5.5 trillion of U.S. assets, and U.S. banks hold $3 trillion of foreign assets.

While these interconnections have great benefits for the United States, they are not without risks, IMF Managing Director Christine Lagarde has warned, referring to the collapse of Lehman Brothers five years ago that ushered in “a harsh new reality” across sectors, countries, and the world.

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A Global New Deal Can End Menacing Austerity

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By R. Nastranis | IDN-InDepth NewsAnalysis

BERLIN (IDN) - Economic austerity is spreading its tentacles to rich and poor countries around the world threatening to impact 5.8 billion citizens this year, and 6.3 billion or 90 percent of global population by 2015, warns a new report and calls for a Global New Deal to stave off the menacing situation.

A Global New Deal involves public investments to boost employment, catalyse sustainable development, improve living standards, reduce inequalities and promote political stability, says the report, titled ‘The Age of Austerity – A Review of Public Expenditures and Adjustment Measures in 181 Countries’.

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Debt Crises Can and Need Be Resolved

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By Martin Khor* | IDN-InDepth NewsViewpoint

GENEVA (IDN) - The issue of foreign debt has made a major comeback. This is due to the crisis in Europe, in which many countries had to seek big bailouts to keep them from defaulting on their loan payments. Before this, debt crises have been associated with African and Latin American countries. In 1997-99, three East Asian countries also joined the indebted countries’ club.

European countries, notably Germany, insisted that private creditors share the burden of resolving the Greek crisis. They had to take a “haircut” of about half, meaning that they would be repaid only half the amount they were owed.

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