1 Global economy to grow faster in 2014 (Nouriel Roubini in The Guardian) The global economy had another difficult year in 2013. The advanced economies' below-trend growth continued, with output rising at an average annual rate of about 1%, while many emerging markets experienced a slowdown to below-trend 4.8% growth. After a year of subpar 2.9% global growth, what does 2014 hold in store for the world economy? The good news is that economic performance will pick up modestly in both advanced economies and emerging markets.
The advanced economies, benefiting from a half-decade of painful private-sector deleveraging (households, banks, and non-financial firms), a smaller fiscal drag (with the exception of Japan), and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9%. Moreover, so-called tail risks (low-probability, high-impact shocks) will be less salient in 2014.
The threat, for example, of a eurozone implosion, another government shutdown or debt-ceiling fight in the US, a hard landing in China, or a war between Israel and Iran over nuclear proliferation, will be far more subdued. Still, most advanced economies (the US, the eurozone, Japan, the UK, Australia, and Canada) will barely reach potential growth, or will remain below it.
High budget deficits and public debt burdens will force governments to continue painful fiscal adjustment. And an abundance of policy and regulatory uncertainties will keep private investment spending in check. The outlook for 2014 is dampened by longer-term constraints as well. Indeed, there is a looming risk of secular stagnation in many advanced economies, owing to the adverse effect on productivity growth of years of underinvestment in human and physical capital.
Emerging economies will grow faster in 2014 – closer to 5% year on year – for several reasons. Brisker recovery in advanced economies will boost imports from emerging markets. The Fed's exit from QE will be slow, keeping interest rates low. Policy reforms in China will attenuate the risk of a hard landing. Still, some emerging markets – namely, India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela – will remain fragile in 2014, owing to large external and fiscal deficits, slowing growth, below target inflation and election-related political tensions. In sum, the global economy will grow faster in 2014, while tail risks will be lower.
Established political parties like the Congress and BJP mocked AAP in the run-up to the Delhi elections just as they took pot-shots at the 2011 agitation, saying that let’s see you contest elections and capture the people’s vote. In Delhi, at least, all this has happened. Analysts also believe that AAP, which has taken support from the Congress to form the government after saying a clear no earlier, could go with the BJP in the event of a hung Lok Sabha next year.
As AAP’s plans to contest the parliamentary elections are awaited, it’s evident that the political space ceded by the Congress and BJP in Delhi is not restricted to the capital. The whole of India is open for AAP to capture. Already, AAP’s political machinery is being activated across the country and they have begun inviting candidates to contest the 2014 parliamentary polls. In the interim, there is the small matter of delivering in Delhi.
The party has promised a 50 per cent reduction in electricity bills and free water to households using less than 700 litres of water per day. Their manifesto also talks of setting up an anti-corruption ombudsman within 15 days of taking office. It’s not Delhi, but the whole of India that will be watching the delivery and performance of the Aam Aadmi Party. Best of luck, AAP.