State of the Global Economy 2016   Five opinions

The world will face economic challenges on multiple fronts in 2016. As the U.S. Federal Reserve begins its monetary tightening, Europe is struggling to manage migrant and debt crises, China’s financial stability is in doubt, and emerging economies are increasingly fragile.

The global economy “could be doing much worse,” writes CFR Senior Fellow and Harvard economist Kenneth Rogoff. Low oil prices and weak currencies are keeping the European and Japanese economies afloat, but Rogoff warns of “a slowing Chinese economy, collapsing commodity prices, and the beginning of the U.S. Federal Reserve’s rate-hiking cycle.”

Emerging economies like Brazil, South Africa, Thailand, and Turkey, rather than China, will be the real sources of concern in 2016, argues U.C. Berkeley’s Barry Eichengreen. With their high levels of short-term debt, these countries are vulnerable to currency crisis, “potentially leading to economic collapse.”

Varun Sivaram thinks new investments announced at the Paris climate talks are reason for optimism in the energy sector. In particular, the $20 billion earmarked for clean energy research and development “could make it more likely for breakthrough technologies to emerge.”

In the United States, meanwhile, steady GDP and job growth has been constrained by weak productivity gains, writes American Enterprise Institute’s James Pethokoukis. Without increased productivity delivering higher living standards, the United States could face decades of “unhealthy economic populism.”

Europe continues to face the risk of debt crises, writes CFR’s Robert Kahn, but the most dangerous economic risk for the continent in 2016 is “a growing populist challenge from both the Left and Right,” which could create economic policy uncertainty and constrain policymakers.   Global Economy 2016