Date: October 8, 2014

Article Title: IMF says economic growth may never return to pre-crisis levels
Source: The Guardian
Date: October 7, 2014

The INF, oi moie commonly known as the Inteinational Nonetaiy Funu is an inteinational "oiganization of 188
countiies, woiking to fostei global monetaiy coopeiation, secuie financial stability, facilitate inteinational tiaue,
piomote high employment anu sustainable economic giowth, anu ieuuce poveity aiounu the woilu
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." In the
aiticle, the INF announceu that the economic giowth touay anu in the futuie woulu nevei giow at the same pace
as befoie the ciisis of 2uu82uu9 hit. It also iepoiteu that the foiecast of the global giowth is S.S% foi 2u14
which is lowei than it has pievious foiecasteu back in Apiil with a giowth iate of S.7%, which although iemains
unchangeu fiom the pievious yeai (2u1S) but is not entiiely a goou sign since it signals that the economy is
stagnant anu has ieuuceu its piojections foi 2u1S fiom S.9% in Apiil to S.8%, but stating that they aie being
optimistic foi the futuie. The total woilu economy was woith aiounu 0S$ 71.8S tiillion (nominal uBP) in 2u12.
The ieasons given behinu this was that the countiies coulu not iecovei stiongly fiom the 'woist iecession of the
postwai eia meant that theie was a iisk of stagnation oi peisistently weak activity."
The aiticle also mentions about 4 main iisks that coulu have an impact on the global giowth iate foi the shoit
teim which incluue: a) The financial maiket weie too unbotheieu about the futuie. b) The tensions between
Russia anu 0kiaine (the sanctions imposeu on Russia will have a uiiect anu inuiiect affect on the E0 anu 0S
maiket which woulu then have a fuithei impact of othei ueveloping maikets) (foi example: the manufactuiing
sectoi in the 0K has giown by only u.1% in August uue to an inuiiect impact of the 0kiaine - Russia ciisis since
a uecline in business confiuence anu the ueiman manufactuiing output aie inuiiectly iesponsible foi the
extiemely slow giowth iate as the manufactuiing cycle is highly integiateu acioss countiies. c) The Niuule East
anu ISIS ISIL as people will feai anu speculations will uiive them away fiom investing. u) That a tiiple-uip
iecession in the Euiozone coulu leau to ueflation negative inflation which woulu leau to piices of goou anu
seivices being uecieaseu anu so will the ieal value of money.
The aiticle then talks about the INF 'speculating assuming' (baseu on its ieseaich) that the 0S Feueial Reseive
anu the Bank of Englanu will be the fiist to iaise its inteiest iates by the miuule of 2u1S. The cuiient inteiest
iates aie hoveiing aiounu neaily u% so as to give the economy a boost aftei the uamage causeu to it uuiing the
financial ciisis. Low inteiest iates assist businesses anu householus to invest in new spenuing anu help suppoit
the piices of many othei assets, such as stocks anu houses since people will boiiow to take auvantage of the low
inteiest being chaigeu on theii piincipal. The INF as mentioneu, is an inteinational institution oiganization
that pioviues infoimation anu suggestions to its membeis suggesteu that the 0S anu 0K keep its inteiest iates
as low as possible so as to assist the weak uemanu in oiuei to let it giow as until cuiiently, the impact of the low
inteiest iate has not shown its outcome. It also suggesteu that stiongei economies with a healthy public finances
(ueimany) shoulu spenu moie on infiastiuctuie in oiuei to boost giowth since as goveinment spenuing woulu
stimulate uemanu, cieate jobs anu suppoit long-teim giowth.
It also mentioneu about the balancing buugets saying that ueimany shoulu be caieful iegaiuing its stiategies to
ieuuce buuget ueficits.
It also commenteu on the Euio anu the Yen by using uesciiptive uata to say that the cuiiencies aie at high iisk of
becoming stagnant which woulu leau to high levels of unemployment anu fuithei leau to lowei puichasing
powei of the inuiviuual anu businesses which means lessei consumei spenuing, putting the economy into a
fuithei uownfall, basically a vicious cycle.
The 0K, the fastest of the u7 nations is piojecteu to giow its uBP by S.2% in 2u14, which was an inciease by
u.S% fiom Apiil anu the 0S will giow by a piojecteu iate of 2.2% in 2u14 anu S.1% in 2u1S (if eveiything
iemains the same, incluuing the FEB's keeping the low inteiest iates)
}apan's moie matuie woikfoice anu the level of uebt that is payable will keep its giowth iate between u to 1%,
anu the E0, which is pieuicteu to giow by u.8% but also in uangei of ueflation, which woulu make loans moie
expensive to finance.
Although the aiticle has mentioneu a lot about the E0 aiea, it also stateu that since things aie staiting to see light
in the aiea, it woulu not consiuei its finuings anu pieuictions to be 1uu% accuiate uue to the evei-changing face
of the political anu economical lanuscape anu that the economic slowuown was eviuent in emeiging maikets as
well.
Although if evei such a scenaiio as assumeu upon weie evei to happen, it woulu be "the majoi issue confionting
the global economy."

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