Austerity cuts can only be part of the solution to restoring economic prosperity in the Western economy. That’s the view of the economic team at The Economist (disclosure: client) published in a special cover report this week on the world economy.
At first sight The Economist says that the recovery is in pretty decent shape. The IMF reckons that global GDP should expand by 4.8 per cent this year. But this statistics plasters over the chasm between the emerging and rich economies.
The Economist makes the case that long-term growth may depend on structural reforms as much as prudent macroeconomic policy. “Governments should think more coherently about how to support demand and boost supply,” it says.
What a dilemma the world faces; growth in global GDP good, shrinking economies bad; all of us want more, the best, the latest gadgets we can afford ( myself included), but more growth in Global GDP means increased consumption, more energy used, more finite natural resources used up..and it is simply not sustainable long-term; at some stage we will be forced to live with less. Perhaps accepting, and adapting to, less sooner rather than later might help make the the planet more viable and sustainable for future generations? I don’t expect any political party to succeed on a ‘ we want you all to have less for the sake of your grandchildren’ platform anytime soon though.