There are many factors to be reckoned with .US with its virtual printing of dollars through QE while debilitating its economy, strangely strengthens its currency ! .The flood of liquidity from ECB and Japan has added to the problem. Persistent imperfections in an international monetary system based on the dollar skews exchange rates which in normal times should spur trade to reset equilibrium.But Global Trade is in descent, as the US is unable to generate demand , India unable to step up supply due to poor growth of infra sector. China's economy is deflating, saddled with idle capacity.The euro zone keeps wrestling with its unresolved structural issues carried from birth and South American nations are high inflation levels with huge fiscal deficits .
.A new twist now comes from plunging crude prices.Data of past four decades show that elevated oil prices had been co-terminus with surge in global economy. Global trade indexed at 50 in 1990 improved to 100 in 2000, shot up to 250 in 2008 ,prior to the global crisis.Crude was languishing for long prior to 1990 at around $35 . shooting to an unprecedented $145 in end 2007. When global economies suffered post 2008-09 ,Brent crude fell to $90 by end 2010. In such a backdrop, prolonged low price of crude could portend a stasis in world growth and hence trade The remedy ought to lie in an universal resolve to re-kindle world trade and place it at a far higher orbit to enable regain global economic order. Make in India is tied up with an upsurge in global trade.
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