A FINANCIAL crash in Russia; falling oil prices and a strong dollar; a new gold rush in Silicon Valley and a resurgent American economy; weakness in Germany and Japan; tumbling currencies in emerging markets from Brazil to Indonesia; an embattled Democrat in the White House. Is that a forecast of the world in 2015 or a portrait of the late 1990s? The optimism in America stood in stark contrast to gloom elsewhere, as it does today. Japan’s economy had slipped into deflation in 1997. Germany was “the sick man of Europe”, its firms held back by rigid labour markets and other high costs. Emerging markets, having soared ahead, were in crisis: between 1997 and 1999 countries from Thailand to Brazil saw their currencies crash as foreign capital fled and dollar-denominated debts proved unpayable. Inevitably the parallels are not perfect. The biggest difference is China, a bit-part player in 1999 and now the world’s second-biggest economy, contributing disproportionately to global growth. But there are three trends at work that destabilised the world economy then and could do the same now economist/news/leaders/21636742-world-economy-2015-will-carry-troubling-echoes-late-1990s-past-and-future-tense?fsrc=scn/li/cp/pe/pastandfuturetense
Posted on: Sat, 20 Dec 2014 11:46:45 +0000
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