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Coping With Slowing Growth — On a national level, there haven’t been too many economic winners in the past few years. Emerging markets, as is usually the case, find themselves in the worst spot.
A lack of infrastructure to get a handle on C-19 decimated many of these economies, and the effects of interest rate tightening will slow precious capital flows into those countries.
The kings of the jungle, like the US, China, and the UK, have managed to eke out some growth, but the prospects for future growth appear dim.
Some of the headwinds include:
- A debt overhang after decades of credit binging
- Unfavorable demographics, with too many older people to support and too few young workers to underpin economic productivity
- A retreat from globalization in the wake of the supply chain mess driven by C-19
The latter point is already being felt in various industries, especially chips.
The US and China have had a productive economic relationship making semiconductors for decades. But recently, Joey B and team put controls in place to protect chip-related IP, which will likely dent growth in that sector for both countries.
The optimistic case is this could allow developing economies to take center stage, but that relies on a lot of assumptions.
Africa has the demographics you’d want for a growing economy but is way short of the infrastructure required to attract foreign investment.
When the pie isn’t growing, there tends to be more conflict over who gets what share. Hopefully, leaders can sort out a way to minimize the damage.
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Veritatis rem non blanditiis mollitia. Cupiditate accusantium maiores rerum.
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