Global Economy, Economic Environment, Energy, Money & Finance, GDP
The impact of the load-shedding crisis of 2008 is still being felt in South Africa. The cost to the economy of the blackouts that rolled across the country for three months is estimated at R50 billion ($6.5 billion). Under the combined weight of global recession and the self-inflicted wound of massive power cuts, GDP growth slipped to 2.1% in the first quarter of 2008 and ended the year below 4% for the first time in five years.
A few years ago, many (if not most) energy analysts expected that U.S. oil production would continue its secular decline as older oil fields played out and as finding and developing new production capacity became increasingly difficult and expensive. At the same time, long-run projections showed U.S. oil consumption expanding over time as both the economy and population grew. Both projections have been stood on their head; the trends in production and consumption over the last five years dramatically illustrate how quickly the U.S. oil situation has reversed course.
Global Economy, Money & Finance, GDP, Government Finance
The Eurozone sovereign debt crisis is far from over. It will take years, not months, for excessively high government debt-to-GDP ratios to stabilize, much less begin to decline. Eurozone political leaders recently agreed upon a second multilateral assistance package that is designed to give the Greek government a respite when the first tranche is paid in. Subsequent disbursements, however, are subject to reviews by the IMF, which will check on progress in many areas; poor compliance by the Greek government on tax reform or privatization, for example, could derail the program.
The relationship between the two economic juggernauts cannot exactly be characterized as free trade nirvana, and there is a growing sentiment in the United States that China has not fully lived up to the commitments it made when joining the WTO. This is fueled in no small part by concern over the massive trade surplus China has built up with the United States, its largest trading partner. By deliberately undervaluing its currency, critics charge, China has propped up its export-dependent growth model.
In the aftermath of the September 11, 2001 terrorist attacks, one of the victims of increasing security concerns in the United States was Canada-U.S. trade. "Security trumps trade" became the new U.S. policy principle as myriad additional verifications of freight and individuals crossing the Canada-U.S. border were put in place to protect against potential terrorist threats.
Global Economy, Competitiveness, Foreign Trade, Imports & Exports
Intense discussion of the eurozone financial crisis has centered on fiscal accounts and the banking sector. Little attention has been paid to the impact on trade beyond the obvious fact that if there is slower eurozone growth, import growth will also be down. The adverse trade impact of the eurozone on third countries, however, and on U.S. exports of manufactures in particular, is significant and growing, and faces uncertain prospects ahead.