Recommendations From Astana Economic Forum 2015

("World economy and Integration," "Infrastructure," "Green economy and Innovations," "Inclusive growth and human capital," "Business and capital markets") 

ASTANA, Kazakhstan, July 6, 2015 /CNW/ - Astana Economic Forum 2015 was held on 21st and 22nd of May. A central theme of the Forum was "Infrastructure - a driver of sustainable economic growth." 

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World economy and Integration 

The world economy is facing major cross currents - oil prices, exchange rate adjustments, divergence of monetary policies and the legacies of the Great Recession of 2009. Global economic growth remains weak and moderate while potential output growth has declined.

The decline in the price of oil has led to a large reallocation of real income from oil exporters to oil importers. For the last group of countries, this increase in real income is leading to an increase in spending. The lower oil price benefits the U.S. in particular, where the positive consumption effect largely dominates the negative investment effects in the oil industry. It could make the U.S. the dominant engine again for world output, in particular in its role as consumer of last resort. This could lead to a resumption of large external imbalances, with the U.S. again approaching a current account deficit of up to 5 percent of GDP.

For the oil exporters, the time of low oil prices, perhaps, is a good time for structural and institutional reforms to diversify their economies and increase robustness of the long-run economic growth.

The volatility of exchange rates has been unusually large while divergence in monetary policy is observed. From May 2014 to April 2015, Euro-Dollar moved from 1.34 to 1.08 - this exchange rate has improved the Eurozone's competitiveness and growth prospects. The fact that the U.S. is close to exit from the zero lower bound may lead to an increase in interest rates while in the Eurozone and in Japan we're clearly very far away from it. So, this divergence in monetary policies explains most of the movement in exchange rates.

Legacies of the Great Recession are still in place in many countries. There is still a downward pressure on domestic demand and growth from a weak banking sector and high levels of debt.


In addition to consumption, infrastructure could be a key driver of the resumption of real activity growth and job creation in advanced and emerging economies going forward.  Read more…

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SOURCE Astana Economic Forum

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