"Industrialised countries have changed regime. Growth is permanently slower than during the pre-crisis period, with the exception of Germany. Emerging countries no longer have the capacity to drive the global economy since China is in a phase of transition towards a service economy.
That is not creating any pressure on the productive system or on wages.
Monetary policies have reduced risks, but now seem unable to go any further.
An impetus must be found that can permanently change the trajectory of the global economy in order to create robust employment growth. Waiting for the macroeconomic impact of technological innovations will take too long. For the time being, the impacts on productivity are too limited to change the growth profile.
Oil has failed to create this impetus despite a steep and long-lasting fall in its price
Central banks' low interest rates have also failed to do so.
The euro zone has been unable to become independent from the global cycle despite of a monetary policy aimed at improving its competitiveness and at making the economic cycle better synchronised between the countries in the zone.
The United States no longer seems robust enough: this is what Yellen said recently when she indicated that the US economy is not solid enough to absorb external shocks. This is not explained in particular by China or others. That is what is worrying, especially as recent domestic data (consumption, investment) do not point to an acceleration in activity.
China is no longer the short-term regulator it was in the past, but represents a risk to the global economy because of an excessive debt level, especially among companies.
The impetus in question could be public investment. Rather than being satisfied with excessively weak growth, let us take a risk when interest rates are very low to shift to a higher trajectory. Economic policy can no longer have only one leg. The accommodating monetary policy has created the prerequisites for a return of growth and inflation, but this must be completed by a more expansionary fiscal policy. There must be as many economic policy instruments as there are objectives. These policies must be all the more active as growth and inflation are far below targets that would reflect a balanced and sustainable situation in the medium term."
Philippe Waechter, Chefökonom, Natixis Global Asset Management
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