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The Economist: EU, US politics to shape 2017

The European Union will make an example out of the UK’s vote to leave the bloc and the US economy will grow more quickly, accelerating to a recession by 2019, according to Robin Bew, managing director of the Economist Intelligence Unit.

The EconomistRobin Bew, managing director of the Economist Intelligence Unit, told SIEM delegates how politics will shape 2017. Photo: The PIE News

“We’ll go from Africa rising to Africa diverging"

Giving his annual closing address at the British Council’s Services for International Education Marketing conference, Bew forecasted the events that will shape 2017 and global politics were at the very top.

In the Eurozone, especially, where elections in the Netherlands, France and Germany will post “existential risks” to the bloc, politics will shape events in 2017.

“Brexit has caused a reevaluation of what’s happening in the rest of Europe”

“Brexit has caused a reevaluation of what’s happening in the rest of Europe,” observed Bew. “There’s a sudden recognition of elections coming up in Europe in 2017 and a worry that maybe what’s happened in Britain will repeat over the course of the next few years.”

Citing calls for a second independence referendum in Scotland and a potential further break up of the UK if Northern Ireland reunifies with the Republic of Ireland, Bew said it’s increasingly clear that the EU will take a “tough line” during Brexit negotiations.

“They need to show that Britain will come out bad from this to make it clear to other countries that leaving the EU is not an easy path.”

The country will end up in worse trading positions with major markets, the EU included, said Bew, predicting a clamp down on the free movement of people which will severely impact the UK’s services sector.

In the US, educators will likely be impacted by president-elect Donald Trump’s “unwelcoming narrative” forecasted Bew, but the economy will remain strong for a few years, driven mostly by Trump’s promised investments into infrastructure.

“Trump ran on a ticket saying he would galvanise US growth but it’s actually not too bad compared to rest of the world.”

Such growth, however, will accelerate the economic patterns of recession after growth. Bew expects inflation to pick up quickly and to see the US stagnating by 2019.

“Trump ran on a ticket saying he would galvanise US growth but it’s actually not too bad compared to rest of the world”

“The US economy doesn’t grow the way it used to because it’s not as productive as it used to be,” noted Bew. “There is more investment from the government to try to increase payouts, and there are other things that it could do but Trump doesn’t have a feel on this stuff.

“To the extent of policy that will improve productivity by opening up to other countries, that seems to be anti what he believes in.”

Economic struggles in the US and across the EU will make way for emerging economies to gain ground. Real growth of GDP means the future looks good for Vietnam, Cambodia, Laos and Burma, according to Bew. “They’re looking very interesting right now. They’re making the stuff that China used to make.”

Africa as well will begin to pick up, as growth in some countries pulls ahead of others on the continent.  “We’ll go from Africa rising to Africa diverging,” predicted Bew, ear tagging Ethiopia, Ghana, Kenya, Senegal and Cote D’Ivoire as countries to excel.

Meanwhile economic performance in Latin America should pick up, thanks to growth in Colombia and Peru, and the Middle East should fare better, but there won’t be any return to sky high oil prices, he said.

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