Turkey: An economy at a crossroads

Its past included strong growth. Its present is in turmoil. What might the future hold for Turkey?

John GreenwoodIt is not a stretch to say that Turkey is beset by troubles both external and internal. Syria’s civil war to the south has caused an unanticipated economic and social strain on the country, and fears of continued terrorism have slowed the engine of tourism. Meanwhile, the government is seeking to bolster its power after an unsuccessful coup attempt last July. How the country handles these myriad issues could set the stage for either an economic recovery or a further descent into crisis.

Syrian civil war stresses

Turkey shares a 500-mile border with Syria, and it is estimated that over three million refugees have found their way north since hostilities began six years ago. Absorbing such an influx would be


Could hyperinflation be next for Venezuela?

Why we are likely witnessing the end of ‘Chavismo’

We’ve all seen the news reports – lines for food and basic staples that stretch for blocks, increasing violent crime, kidnappings and corruption are making day-to-day life in Venezuela a real struggle. It wasn’t always like this, but in the past 20 years Venezuela has gone from one of the richest countries in South America to one of the poorest. To make matters worse, the country is now in the throes of near hyperinflation reminiscent of post-WW1 Weimar Germany or Zimbabwe in the years before dollarization in 2009.

How could a country blessed with abundant natural resources, tropical weather and nearly 1,800 miles of Caribbean coastline descend into chaos so quickly? And what will the future hold for Venezuela?


Will Trump’s fiscal stimulus lead to inflation?

Without a surge in monetary growth, fiscal policy alone doesn’t indicate inflation

John GreenwoodFinancial markets have reacted strongly to the election of US President Donald Trump. While equities in the US and elsewhere have risen strongly (reflecting expectations of stronger growth and therefore improved corporate earnings), bond prices have fallen (reflecting higher yields, in turn a result of higher inflation expectations). As debate continues around President Trump’s fiscal stimulus program, a key question has emerged: What role might his policies play in creating inflation?

A large fiscal deficit does not necessarily lead to inflation

Among the main drivers of higher inflation expectations, one is


History rhymes: Comparing China today with 1920s Japan

China faces two main options in dealing with its economic distortions

John GreenwoodThe Chinese currency has been depreciating since January 2014, and the balance of payments has weakened. There has been a substantial decline in the current account surplus relative to gross domestic product (GDP) since 2010 and, more recently, persistent private sector capital outflows.

The question is: How long will the Chinese yuan continue to depreciate and how much will China’s exchange reserves decline?


Global economy: How might economic recovery differ across developed and emerging economies?

2017 Investment Outlook series

John GreenwoodOver the past several years, both the developed and emerging worlds have been responding to the long shadow of the great recession of 2008 and 2009, and the cycles in each area have diverged.

The recovery of the developed economies has been hampered by two factors: the slow process of balance sheet repair, especially among the banks, and the differing consequences of the implementation of quantitative easing (QE). These factors have combined to create subpar growth, an agonizingly slow return to full employment, low wage growth and fractious electorates.

By contrast, the emerging economies implemented strong stimulus programs between 2008 and 2010. These proved so successful that some economies, including China, Brazil and Russia, had to reverse course and slam on the brakes in 2011 and 2012. As a result, between 2014 and 2016, they too experienced economic slowdowns, recessions, currency weakness and the pain of debt workouts.

For both developed and emerging economies, the outlook for 2017 will be closely correlated to how these differing problems are addressed.