Unites States, Europe, emerging countries all react differently to the same macroeconomic scenarios, and one after the other suffer the effects of the Middle Eastern geopolitical crisis with Europe on the front line.
The global economy is slowing. Emerging markets are struggling and many high-income countries continue to grapple with the legacies of the global financial crisis. But this is not the only cause for concern. The Syrian civil war and the subsequent emergence and spread of Islamic State (IS) have captured the world’s attention. We are all watching the Middle East, searching for a response to the brutality of terrorism. And because the fragile global economy is vulnerable to another oil shock, IS could become an economic threat as well. We must also consider the potential spill over effect from recent moves by the Federal Reserve.
The International Monetary Fund (IMF) has warned of the coming slowdown: “Global growth for 2015 is projected at 3.1 %, 0.3 percentage point lower than in 2014 and 0.2 percentage point below the forecasts in the July 2015 World Economic Outlook (WEO) Update”. This comes as no surprise, as “activity in emerging market and developing economies is projected to slow for the fifth year in a row, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries”, according to the IMF. With this in mind, EastWest sat down with Tyler Cowen, professor of economics at George Mason University and director of the Mercatus Center, to discuss the state of the global economy.