Global Economy

A Year of Divergence

Not together for long.
  • Why it matters

    Why it matters

    Mr. El-Erian argues that the multi-track recovery of the global economy presents major challenges for central bankers and policymakers around the world.

  • Facts


    • The United States, China and the euro zone are expected to move in different economic directions in 2015.
    • The key “wild card” countries that could affect the global economy in 2015 include Russia and Brazil.
    • The U.S. Federal Reserve is expected to raise interest rates and the European Central Bank is expected to ease monetary policy further.
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In the coming year, “divergence” will be a major global economic theme, applying to economic trends, policies, and performance.

As the year progresses, these divergences will become increasingly difficult to reconcile, leaving policymakers with a choice: overcome the obstacles that have so far impeded effective action, or risk allowing their economies to be destabilized.

The multi-speed global economy will be dominated by four groups of countries. The first, led by the United States, will experience continued improvement in economic performance. Their labor markets will become stronger, with job creation accompanied by wage recovery.

The benefits of economic growth will be less unequally distributed than in the past few years, though they will still accrue disproportionately to those who are already better off.

The second group, led by China, will stabilize at lower growth rates than recent historical averages, while continuing to mature structurally. They will gradually reorient their growth models to make them more sustainable – an effort that occasional bouts of global financial-market instability will shake, but not derail.

And they will work to deepen their internal markets, improve regulatory frameworks, empower the private sector and expand the scope of market-based economic management.

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