IEE Forecast. In economic there can be a slow economic growth with the crisis periods

The deficiency growth of the account of current operations in the USA is connected first of all with smooth and deep downturn of a discount rate. The reason for it, as we consider, is FRS struggle against recession of economy in the USA, which has started in 2000 and proceeded till 2003.Embodied in decrease in rates of economic growth of about 2 % a year in spite of the fact that decrease did not cross a zero mark, recession has provoked corrupt processes in economy as a whole. The rates of return have appeared, first of all, in decrease in corporate sector. Growth of bankruptcies and financial scandals during this period proves that these uneasy processes are present.In these conditions, the USA accept the correct decision on smooth decrease for a discount rate that speaks about certain strategic direction in the policy of protection for national economic interests.At least two arguments speak in favor of such conclusion. First, the growth of the monetary offer should cause decrease in the real prices for money automatically. That would make active consumption of three basic institutional sectors in economy - households, that of firms and external. Second, however low the discount rate decreased, FRS, the Ministry of Labor and the Ministry of Finance neither in rates, nor in depth of decrease did not allow negative consequences in growth of inflation and unemployment above critical marks 5-6 %.The main result of such policy was not only growth of effective demand, but also " expression of surpluses " of the goods and services abroad. The USA made it by powerful economic "machine", and in economic categories it means growth of current operations. The speech at the G7 summit concerned it. In these conditions those countries which currencies have been adhered to dollar, left in safe position (i.e. China and Japan). Ukraine also belongs to them. And on the contrary, the countries at which there were no such binding, have lost. These are the EU countries. All weight of the goods and services, not only American but also the countries with currencies adhered to dollar, has pulled hard on them. It is easy to predict, that growth of the goods and services offer inevitably should cause reduction of prices, profitability, and as the result, growth of unemployment in EU.The European central bank has simply passed both, the moment and the situation when it was necessary to lower the discount rate in the answer or even actively come on the currency markets. In the world almost for the first time there was a situation when the discount rate needed to be used not as a result of changes of an intraeconomic situation, and for neutralization of increasing external risks. As a result, when there has come enlightenment, to lower a discount rate was already late, as unemployment in a number of the EU countries has exceeded a critical mark 6 %. Therefore they have been deprived of an opportunity to maneuver in the control of inflation over unemployment. Deficiencies of state budgets of the key countries have exceeded 8 % (reference: it is considered, that if deficiency of the state budget does not exceed 2 % of gross national product, it does not render negative influence on economy; the EU countries have agreed about 3 % of deficiency, "having put in pawn" for costs of integration processes) Germany has an interesting position, as it has declared the bottom border of a discount rate, at a level of 2 %. 2005 will show whether they were right.There was a moment when England has decreased a discount rate. However, growth of credits has stopped them and they have raised it again. Nevertheless it seems, that Europeans were not ready to meet a new situation with increase of euro rate. It seems, that they did not have a ready strategy on this account and they have absolutely lost this game to Americans. It is impossible to tell so about China. Now, Americans, having reached the purpose and having relieved economy from surplus of goods of traditional manufacture, have begun reverse move and increase the discount rate. Here, apparently, they again adhere to the verified strategy. Increase should be not so fast in order not to render negative influence for rates of economic growth (on the role in this process of OPEC policy IEE spoke in previous forecast). It should also be not so slow in order  not to be late with pressure upon deficiency reduction of the current account. By the way, it also corresponds to periodic official applications.It is possible to be late with this "reverse move" of a discount rate. This already signals reaction of such authorities of the market as Soros and Gates. The government sector does not hide expectations of decrease in a market rate of exchange too. But Americans have won the first game of this interesting struggle. And, no doubt, it is a merit of their strategy. And there is a doubt whether they will win the second game. And it is not even the matter if they can outstrip their nearest competitors by monetary maneuvers. They have already done. The matter is how they used the won in the first round advantage. Finally, only scientific and technical progress, and innovation have crucial importance in leadership. It is possible and is necessary to use existing economic capacities by expansion the world consumption. It may be expanded through reduction of non-uniformity of incomes distribution in the world, strengthening of processes of globalization, etc. However, the further expansion on the basis of traditional economy already obviously approaches to the natural limit, which is dictated by a growing pressure in the sphere of corresponding traditional resources.Therefore, if only the USA could not embody the advantage in a system innovation, the world in the nearest fifth anniversary expects slow economic growth with painful periods and with gradual displacement of accents in favor of the Asian civilization. And, on the contrary, if it took place, the world will change qualitatively and quickly. Here only growth of a discount rate in the USA in new conditions will already cause an attraction of traditional capitals from other regions. We will analyze in our following reviews how it can affect their innovative processes and the world dynamics.

Makarenko

IEE

Posted on the website: 2005-02-07