Low investment is the cause of low growth – surprise!


Michael Roberts Blog

In its latest economic report, the IMF came to two important conclusions about the state of world capitalism in 2015 (http://www.imf.org/exter…/…/ft/survey/so/2015/NEW040715A.htm).

First, it reckons that global capitalism will remain in a depression. The IMF says that “a large share of the output loss since the crisis can now be seen as permanent, and policies are thus unlikely to return investment fully to its pre-crisis trend”. While potential growth in advanced economies will tick up in the next five years, it will remain well below levels before the financial crisis. Emerging nations will see their potential growth decline over the same period.

IMF-1

In advanced economies, real GDP growth that maximises potential capacity will ‘accelerate’ to an average of just 1.6% over the next five years, compared with 1.3% from 2008 to 2014. But this growth will remain weaker than the 2.3% pace from 2001 to 2007. The IMF economists…

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