Joseph Stiglitz : 2016 to be bad as Global slowdown, to continue this year

Joseph Stiglitz, Nobel Laureate and professor, of Columbia University said In a conference call with analysts organised by UBS that the  global economy is not going to improve much this year. He also spoke on a range of issues confronting the world economy and identified lack of demand as the major problem coupled with the slow deceleration in China.

Previously the economy was worse  during the two recessions and the year 2015 was a hard one all around. 2016  also seems to be bad as there is a global slowdown, as Brazil and Russia fell into recession.

China’s economy experienced its first serious bumps after almost four decades of breakneck growth. The eurozone managed to avoid a meltdown over Greece, but its near-stagnation has continued, while the US is growing slowly.

Joseph Stiglitz said 2016 and 2018,  would be another year of crisis. About 60 per cent of voters from countries such as Greece, Spain and Portugal have voted against the austerity measures, while the euro zone has not changed its policy.

He said “I see lot of political and economic turmoil in Europe because they have not fix the economic framework. I don’t think interest rates
in US will increase very quickly, but in 2017 or 2018, there would be some pressure. The liquidity during the QE programme created asset price bubbles, now when this liquidity will be withdrawn from markets, one need to see how these asset prices will adjust.”

China has to invest in new enterprises, new industries, innovations, and services. China needs to increase its tax base as this will support the government spending and stimulate the economy. The major problem China is facing today is in spaces such as environment, health, education and financial instability.

Stock markets, of  American and Chinese,are very unstable. Stiglitz said  “We need rules and regulations to make stock markets less volatile, less unstable and efficient. I think circuit breakers can provide stability to financial markets
provided they are designed correctly, otherwise they can create more instability. The advanced countries have been learning the mechanism of circuit breaker for long time and they have still not got it right, and I think China has to learn and they have to design correctly.”