Economic Outlook Seminar helps us to understand the global market situation
This Thursday, some of the world's leading business economists and central bank representatives will participate in the Swedbank Economic Outlook Seminar. The aim is to try to understand economic policy during and after the crisis: How can monetary policy be used when the repo rate is already close to zero? Will the fiscal tightening not only create a recession but also a depression in the crisis countries of southern Europe, and how can this be prevented? What regulations are required in the aftermath of the crisis?
Although the situation is most serious in Europe with much of the eurozone as well as Denmark and UK in recession, the global economy faces significant risks with regard to developments in the US and China. The eurozone crisis is about diverging competitiveness, excessive public debt, a banking crisis and above all a decision-making crisis regarding economic policy in the eurozone: What should institutions look like for the currency union to survive? Etienne de Lhoneux of the Banque centrale du Luxembourg has insight into the regulatory framework at euro level, while Per Jansson of the Riksbank will relate the financial crisis and monetary policy to the situation in Sweden. Michala Marcussen of Société Générale in London and Joachim Scheide from Kiel Institute will share their views on the situation in the eurozone.
In the US, the fiscal policy runs both short and long term risks, and the burden of responsibility rests heavily on politicians to avoid a recession by agreeing on key decisions on taxes and spending after the election. There is also a risk that the US government debt shoots upwards which could eventually significantly increase uncertainty in the global economy and financial markets. One of the most acclaimed forecasters in the US, Chris Varvares of Macroeconomic Advisers, will give his view on the US position, and of course we will also hear about the situation prior to the presidential election.
China currently accounts for about half of global growth. At the same time, China is being affected by the slowdown in the western world and there is a risk of a harder landing than many expected. Even if politicians will try to maintain growth, they do not have the same ammunition as in 2008-2009 because of the risk of new bubbles in the property market: it is also problematic that the already large infrastructure capacity is being expanded further. The country has a plan to try to raise the consumption share of growth, and the question is whether this plan should now be postponed allowing exports and investments once again to kick-start the economy. John Calverley, head of Macro Economic Research at Standard Chartered Bank in Toronto, has been monitoring China for a long time and was also one of those who foresaw the US financial crisis early on in his book: "Bubbles and How to Survive Them" (2004) and with the sequel: "When Bubbles Burst: Surviving the Financial Fallout " (2009).
We end the day with a panel discussion with some of those who went on a European trip organized by the National Association for Business Economics (NABE). They will have up-to-date inputs from Madrid and Frankfurt and will thereby provide a US perspective on the situation in Europe. With so many knowledgeable and exciting speakers, there is every reason to expect a very rewarding Economic Outlook Seminar.
Videos from the seminar will be available on Friday, 14 Sepember.