But perhaps the more important question is what lies in store after the turnaround? What is certain is that economic growth will be adversely affected by a number of factors in the next five years. The question is, however, whether these factors are so strong as to lastingly dominate the expansionary forces lurking more deeply in the global economy.
What we are witnessing at the moment is a correction of excesses which have their roots above all in the investments of the boom years. The backdrop is that the return on real capital has distanced itself sharply from the costs of borrowed capital. Around the globe, a huge discrepancy has arisen here in recent years.
The excesses which have built up have to be reduced, in particular in the emerging markets. Share prices have already undergone a correction and real estate prices are currently in the process of correcting. It will take longer for the surplus capacities which have built up in some sectors – steel, automobile, electronics – as a result of an overabundant flow of capital into the emerging markets and excessive investment rates, to contract.
For the world economy as a whole this is not necessarily disadvantageous. Progress can be made on reducing imbalances. The buildup of capacity geared solely to exports will be on a smaller scale. For many years global economic growth will be more moderate than in recent years, but stagnation is not on the cards.
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