The last couple of months have witnessed upbeat reports of green shoots as France, Germany and the UK return to positive, albeit rather sluggish, economic growth. Is this consistent with the Outsights scenario Bounce back to business or are we still in Volatile times?

 

As factories were mothballed and manufacturers de-stocked there was always likely to be an upturn towards the end of the year as production swung back into action. The question is: will this translate into sustainable growth? The global economy suffered a sharp body blow and it still faces what has been described by Paul Krugman, the Nobel laureate, as the twin risks of a "Nipponisation" (a Japan-in-the-1990s-style story where there is no room left to cut interest rates) and "Argentinafication" (where, like Argentina in the late 1990s, balance sheet problems leave the economy exposed). Indeed some forecast up to 200 US banks failing in addition to the 81 failures thus far.

 

Compounding the sense of volatile times is an economics profession uncertain of its predictive abilities, having failed to fully anticipate the crash, and of its future direction (for a slew of brow-beating articles see here, here, here and here) though some remind us that even if people anticipated the crash it would be tough to manage. Ultimately, our future ability to manage the global economy will be linked to our ability to understand a system which through globalisation has become ever more complex. This may rely on drawing on different sources of inspiration - as one economist has suggested more Charles Darwin, and less Adam Smith.

 

 

 

21 Drivers for the 21st CenturyTM by Outsights is licensed under a Creative Commons Attribution-Non-Commercial-Share Alike 2.0 UK: England & Wales License.