World Economy in the Long Term: Growth Strategies for the Major Actors

Abstract

This paper analyzes the approach to the global imbalances (and probable global savings deficit) problem in the light of long-term interests of each global actor. It outlines three long-term trends that will change the growth landscape in twenty years to come. Those are population ageing, the rise in household consumption for large developing economies and the next phase of moving production to developing economies. Key long-term interests and structural problems for three key actors — US, EA and China - are identified. The author outlines two long-term scenarios (inflation versus restructuring) of the excess debt and probable savings deficit (a part of the global imbalances problem). The analysis suggests that currently the world economy is on the path to gradual debt restructuring, implying a long period of low economic growth rates.