In the near term, we are definitely seeing signs of improvement in the global economy. The eurozone has emerged from recession, although the picture there is still mixed. China’s slowdown in growth rate looks to be moderating and US economic data continue to show a strengthening recovery. While expectations for global economic growth, corporate earnings and credit availability are improving, many companies are still cautiously weighing macroeconomic and geopolitical risks around the globe.
Over the longer term, globalization, demographic shifts and technology will continue to drive economic growth. Despite the recent slowdown in emerging markets and the improved outlook in developed ones, many emerging markets have younger populations and more favorable dependency ratios. These trends will contribute to the global economic rebalancing that we’ve seen for the past generation.
In the wake of the financial crisis, and as economies become more connected, regulation further complicates the picture. International regulatory cooperation is becoming increasingly important, yet it can be a slow and painstaking process to achieve.
One of the most pressing issues, in both the short and long term, is the sharp rise in youth unemployment that we’ve seen in many countries. This is something that business, governments and international organizations must work together to address. We risk losing a generation in terms of its long-term economic potential. Further, societies that cannot give their young people a stake risk instability and upheaval. Governments should address tight controls over labor markets and ensure that young people receive the education and training they need to secure meaningful, productive jobs.