The news that the IMF is considering lowering its global economic growth forecast should really come as no surprise.
We are entering a phase of ‘friction’.
Now I am not an economist – my main interest is in thinking about who are the architects of the new emerging world order and how they inter-act. In other words, I like to take a behavioural as opposed to a totally ‘rational economic’ perspective. There are a number of reasons why we will enter an extended period of low growth that embrace:
- An evaporation of consumer confidence driven, in turn, by falling confidence in both governments and the financial markets.
- Emerging protectionist tendencies that will cause ‘economic friction’. Such tendencies will be driven by stubborn levels of unemployment in the West and of course the need for the West to reorientate the structure of their economies – the ‘flight to manufacturing’.
- Geo-political worries in Asia – an area widely seen as the ‘cradle of growth’ that will drive a fully-blown global recovery.
This is not an exhaustive list. We have the associated issues of the Euro Crisis and worries about US jobs and the whole issue of resource sustainability.
Whilst I am not an economist, I do use a model to project the economic size of nation states under varying scenarios. The scenario that I have been considering for some time takes into account factors similar to the above and an energy price-induced recession around 2016. This produces interesting ramifications for businesses to consider that range from choice of markets, competitive positioning to the (surprisingly) emergence of the ‘Beijing Consensus’ as the dominant model!
Don’t wait for the revised IMF forecast. Start thinking about this scenario now.