By Mark Sobel 

Pundit predictions for the 2020 global economy abound. A consensus exists – global growth will be underwhelming and flattish; the dollar may weaken a bit but remain firm; asset prices may do somewhat well; and bond yields could go back up a bit.

But rather than focus on the global economy’s transition from one year to the next, 2020’s advent offers the opportunity to reflect on the transition from one decade to another. In this two-part series, the first piece will look at the economic outlook of the 2020s; the second will examine how leaders might respond.

Prior to the 2008 financial crisis, world growth readings in the fours and fives were standard fare.

In the last decade, the G20 came together and overcame the financial crisis. But growth fell towards the low threes, hit by halting recovery from the ‘great recession’ and its systemic financial and balance sheet origins. Europe faced its own crisis. China slowed. Emerging market performance underwhelmed.

Leverage exploded. Overburdened monetary policy swung highly accommodative. Societies aged. Populism surged. Falling R* (the equilibrium real rate of interest), lowflation, stall speed, secular stagnation and Japanification became buzzwords.

Economists often debate whether recoveries from low growth will be U- or V-shaped. International Monetary Fund projections through the mid-2020s point upwards, but those forecasts suffer often from an optimistic bias. Rather, the next decade’s outlook may be L-shaped, and the bottom leg of the L may slope downwards.

By many estimates, US potential growth is slowing to around 1.75%. Private saving is up. Fiscal policy is unlikely to be expansionary in the aftermath of digestion of President Donald Trump’s ineffective tax cuts.

The US will not be a global growth locomotive. US consumers will still love to consume, but not enough for the sake of a vibrant world economy. Financial conditions will remain accommodative, but Federal Reserve accommodation in and of itself will not sustain robust global demand. Further, forecasts for global trade growth are in line with world growth estimates – an elasticity of one, rather than closer to two as in the past.

Even with slowing US potential growth, the country’s capacity to grow exceeds that of Europe and Japan. Despite Trump’s attitude towards immigration, US demographic prospects are still more favourable than those in other advanced economies. Despite the diminishing competitiveness of US markets, its capacity for innovation remains high.

Export-led growth models long practiced around the world will be disrupted. Still, the US could be following in the footsteps of Japan and Europe.

Japanese growth has slowed and potential is seen as around 0.5% of GDP per year. Proactive macroeconomic policies have not prevented persistent lowflation, despite Japan’s massive fiscal debt and the Bank of Japan long being in the vanguard of central banks promoting quantitative easing and the zero lower bound.

In the euro area, aging will hit the workforce. Potential growth is projected to fall to around 1.3%, if not lower. The European Central Bank has been ‘the only game in town’ in combating lowflation, while national policies seem incapable of helping Frankfurt, let alone strengthening weak banks or creating stronger euro area institutions.

Chinese growth rates have slowed to 6% per year from around 10% pre-crisis. Given China’s looming demographic kink, the increasing inefficiency of investment and excess leverage, and an economic shift from industry to consumerism and services, the country’s sustainable growth rate will fall over the coming decade – perhaps to 4%, by some estimates. Amid smaller current account surpluses and absent capital controls that bite, China faces perhaps a great wall of capital outflow, even larger than potential inflows, with important implications for managing currency stability.

Emerging markets will face headwinds. Many are dependent on commodity exports. China accounted for more than one-third of global growth over the past decade, boosting demand and commodity prices; that prop will dissipate. Key Latin American countries seem perennially unable to increase productivity. Northeast and southeast Asian economies have long thrived on external demand. Despite important reforms in past years, India will be held back by its inefficient statist banking system, large general government deficits, and other structural rigidities. Geopolitics, as always, presents enormous downside risks.

The next decade may well be one of further slowing growth, presenting major and new challenges to policy-makers everywhere.

The Writer is US Chairman of Official Monetary Financial Institutions Forum (OMFIF).

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By David Lipton

Last March, Operation Taiex led to the arrest of the gang leader behind the Carbanak and Cobalt malware attacks on over 100 financial institutions worldwide. This law enforcement operation included the Spanish national police, Europol, FBI, the Romanian, Moldovan, Belarusian, and Taiwanese authorities, as well as private cybersecurity companies. Investigators found out that hackers were operating in at least 15 countries.

We all know that money moves quickly around the world. As Operation Taiex shows, cybercrime is doing the same, becoming increasingly able to collaborate rapidly across borders.

To create a cyber-secure world, we must be as fast and globally integrated as the criminals. Facing a global threat with local resources will not be enough. Countries need to do more internally and internationally to coordinate their efforts.

How to best work together

To begin, the private sector offers many good examples of cooperation. The industry deserves credit for taking the lead in many areas—developing technical and risk management standards, convening information-sharing forums, and spending considerable resources. International bodies, including the Group of 7 Cyber Experts group and the Basel Committee, are creating awareness and identifying sound practices for financial sector supervisors. This is important work.

But there is more to be done, especially if we take a global perspective. There are four areas where the international community can come together and boost the work being done at the national level:

First, we need to develop a greater understanding of the risks: the source and nature of threats and how they might impact financial stability. We need more data on threats and on the impact of successful attacks to better understand the risks.

Second, we need to improve collaboration on threat intelligence, incident reporting and best practices in resilience and response. Information sharing between the private and public sector needs to be improved—for example, by reducing barriers to banks reporting issues to financial supervisors and law enforcement.

Different public agencies within a country need to communicate seamlessly. And most challenging, information sharing between countries must improve.

Third, and related, regulatory approaches need to achieve greater consistency. Today, countries have different standards, regulations, and terminology. Reducing this inconsistency will facilitate more communication.

Finally, knowing that attacks will come, countries need to be ready for them. Crisis preparation and response protocols should be developed at both the national and cross-border level, so as to be able to respond and recover operations as soon as possible. Crisis exercises have become crucial in building resilience and the ability to respond, by revealing gaps and weaknesses in processes and decision making.

Connecting the global dots

Because a cyberattack can come from anywhere in the world, or many places at once, crisis response protocols must be articulated within regions and globally.

That means the relevant authorities need to know “whom to call” during a crisis, in nearby and, ideally, also in faraway countries. For small or developing countries, this is a challenge that needs international attention. Many rely on financial services or correspondent lines provided by global banks for financial connection. Developing cross-border response protocols will help countries understand their respective roles in a crisis and ensure a coordinated response in the event of a crisis.

The Group of 7 countries has made an excellent start at building collaboration on cybersecurity, but this effort needs to be broadened to each and every country.

Here the IMF can play an important role. With a much broader representation than most of the standard-setting institutions, the IMF has the ability to raise the concerns of emerging-market and developing countries to a global level. Because any place is a good place to start an attack, it is in the ultimate interest of advanced economies to work with other countries to share information, coordinate actions, and build capacity.

At the IMF, we work with countries that need to build this capacity, developing the skills and expertise needed to recognize and effectively counter cybersecurity threats. Our international partners are doing the same, and we work regularly with an array of stakeholders in the public and private sector.

Successful cyber-attacks have the potential to hamper financial development by creating distrust, especially if personal and financial data are compromised.

If we want to reap the benefits of new technologies that can develop markets and expand financial inclusion, we have to preserve trust, and ensure the security of information and communications technologies. With cybersecurity, there is always more to be done simply because the pace of change is breathtakingly fast.

The Writer is First Deputy Managing Director of the International Monetary Fund (IMF)

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By Norbert Mao

The debate over political nomadism is a healthy one. Crosstitutes are everywhere. The debate about individual choices should also reinvigorate the debate about the role of political parties. Representative democracy needs political parties. That is why some of us campaigned tirelessly for multiparty democracy. But it is not enough to have political parties.

 Parties need internal cohesion, internal democracy, farsighted leadership, constructive inter party relations and creative management of internal conflicts. Unlike football leagues where star players are sold and bought, party politics shouldn’t be about mere power. It should also be about convictions. Without conviction, the exercise of power is an absurdity.

Someone once told me that party politics is characterized by three Ds – disloyalty, defiance and defection. Any party has to contend with those three hazards. The party I lead is no exception. Even developed countries have to deal with these hazards.

In 2008 a former US Vice Presidential candidate for the Democrats snubbed Obama and campaigned for the Republican candidate, John McCain. Even the iconic Churchill was a seasoned switcheroo. In 1904, Churchill who was a conservative crossed to the Liberals then crossed back after 20 years. In his defence he said only fools don’t change their minds!

But the record for criss crossing must go to British MP Bob Spink. On 12 March 2008, he left the Conservatives and became Independent. Six weeks later on 22 April 2008 he joined the UK Independent Party (UKIP). By mid-2009 he declared that he didn’t regard himself as UKIP. At that point UKIP also disowned him saying he had not even paid his membership dues.

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By Nabendeh S.P Wamoto

Recent narrative emanating from Africa kwetu trek from Galamba in Wakiso district to Birembo in Kakumiiro eliminates the hitherto puzzle in the under 40s and outline the fact that most of the population including myself who have worked with the military and security as a whole are ignorant of our combat chronicles because much of the stories have been misrepresented and or misinterpreted by masqueraders who try to speak with their mouths shut or at least give the impression that they are holding small potatoes in their mouths.

This reminds me, of an old lady I met coming from a church service, carrying her Bible, and when I asked her how she did enjoy Sermon of the day, she replied hastily “Not very much. I took the wrong book with me; I ought to have taken a dictionary!” Conscious must be seen in the creation. See it in the thinking but not in the walking.

Most of the masqueraders have their own narrow agenda, seeking simple options, ignoring realities just to appear important and out-lining demands which are not principled hence advocating having a share of the national cake yet they were not ready to understand how to bake the same (cake). The revelation by Gen. Yoweri Museveni to the effect that Dr. Col. Kizza Besigye rescued him from death is an artifact to reckon with and great honesty which supports former Tanzanian President, the late Mwalimu Julius Kambarage Nyerere who once said “Honesty is not the best policy, but should be the only policy.” Remember a blind child doesn’t know even his/her owns mother and what you crave can make you drop what you already have.

Some, especially our young ones, because of the absence of these facts, are always tempted to think President Museveni has a lot in common with Santa Claus, the mythical white-whiskered gentle man who is supposed to bring presents to people during Christmas season. We all know that even though Santa Claus is supposed to bring presents to only good children (read NRM), he doesn’t miss many of our boys and girls no matter how naughty they may have been most of the year. Santa is not very demanding. Somehow he will find a way to over look a child’s naughtiness and will still get toys at Christmas.

The Galamba-Birembo or Africa kwetu trek is incomplete without FRONASA’s  “Mashuja Wa Mianzi-Mashariki”(Bamboo Heroes of the East) marking approximately 95 kilometres whose land mark start point should be Malukhu district  administration grounds where young student Sebastian Namirundu and Tony Masaaba were executed by firing squad by Idi Amin’s Uganda Army (U.A) in 1973.Then to House 49 (late Maube’s residence where Gen. Museveni narrowly escaped death while his two colleagues namely Mpiima Walidi Kazimoto and Martin Mwesiga were shot and killed in cold blood in the same compound). The trek should move through, Butsongola(Late DIGP Maswele’s village and Bishop Wasikye’s home in Mbale district) through Buyobo (late Wadada Nabudere’s village) – Bushiika, Bumasata, Nabweya, Bukirimwa, Bubiita (Mzee makowe’s village) sub counties in Bududa district, Bupoto through the forest to God’s bridge (Daraja la Mungu) and finally to Soono just before Lwakhakha, the border with Kenya in Namisindwa district.

Afrika kwetu trek would be incomplete without Bugisu’s version and contribution.

Nabendeh S.P Wamoto (0776658433)

simonwamoto@yahoo.co.uk

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