Currency wars on the horizon

First published in The Korea Herald. Brazilian Finance Minister Guido Mantega popularized the term “currency war” in 2010 to describe policies employed at the time by major central banks to boost the competitiveness of their economies through weakening their currencies. As we enter 2015, the specter of currency wars appears to be once again looming on the horizon. In layman’s terms, currency wars are said to occur when countries seek to devalue their currency to gain a competitive advantage ― exports become more competitive while imports become more expensive, leading to a rise in aggregate demand, which helps boost economic growth and reduce unemployment. However, if one country seeks to become more competitive through devaluation, it means other countries become less competitive. Therefore,...

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Skidding on oil prices

First published in The Korea Herald. The biggest “energy story” in 2014 was no doubt the oil price crash, which many say has “upended the geopolitical chessboard.” Worth watching in 2015, therefore, is who will recover and dominate the play ― the Organization of Petroleum Exporting Countries, Russia’s President Vladimir Putin who is fighting with his back against the wall, or the U.S. shale companies who are allegedly being targeted by OPEC members. As the U.S. Energy Information Administration has noted in its latest outlook, “The recent declines in oil price and associated increases in oil price volatility have created a particularly uncertain forecasting environment, and several factors could cause oil prices to deviate significantly from current projections. Among these is the responsiveness...

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For world economy, a year of divergence

First published in The Korea Herald. As we step into 2015, it would appear that on the back of a U.S. economic recovery, the dark days of the financial crisis are behind us. As the largest economy, accounting for more than one-fifth of global gross domestic product, the health of the U.S. economy has been critical for steady growth in the rest of the world through trade, foreign investment, financial markets and capital flows. Until now. But, as recent developments have shown, going ahead, there are many more variables that will impact the global economy. Leave aside the fact that the International Monetary Fund has projected the global economy to grow by 3.8 percent in 2015, a little better than the estimated pace of 3.3 percent for the previous year. Europe continues to deleverage with...

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Millennium Development Goals: Not there yet

First published in The Korea Herald. The New Year is significant when it comes to the issue of sustainable economic growth and the promises made by world leaders 14 years ago that have not been fully kept. World leaders, in adopting the United Nations Millennium Declaration in 2000, pledged to create a more equitable world by 2015. However, today, more than ever before, it seems that the wealthiest individuals have become wealthier while the relative situation of people living in poverty has improved little. Disparities in education, health and other dimensions of human development still remain large despite marked progress in reducing the gaps. Various social groups suffer disproportionately from income poverty and inadequate access to quality services and, generally, disparities between...

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