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Paul Gambles

Recognized as a regional financial expert, Paul is a regular speaker at industry events on market forecasting, financial planning, investing and legal issues for foreigners living or doing business in Asia.  Besides Paul’s blog, Paul previously distributed his ‘almost-daily’ email – “Daily Updates”, where he gave his views on timely issues affecting financial markets, macro economics, micro economics and everything in-between.

Born in South Yorkshire, England, Paul graduated from the University of Warwick with an Honours degree in English and European Studies.  He began his financial career in the early 1980s as a technical inspector at HMIT with Inland Revenue.  Following a successful career change to the Bank of Scotland in 1987, Paul moved to Bangkok in 1994 to help set-up an investment counseling practice, which today is known as MBMG International.

www.mbmg-international.com

  

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9 July 2010

The OECD

Even ahead of the recent G20 FudgeFest (the spendthrift countries wanted everyone to carry on spending despite the catastrophic debt levels, the fiscally ‘responsible countries wanted everyone to stop spending despite the recessionary impact of this and they all agreed at the end of it that everyone will basically go home and carry on doing what they were doing anyway and if half spend themselves to oblivion and the other half persevere with austerity packages that destroy growth then the global economy will be balanced – and let’s all have a nice photoshoot!), the OECD’s recent economic outlook highlighted major risks facing the facing the global economy-

“Trade flows are rising again. Strong growth in China and other emerging markets is helping to pull other countries out of recession. But at the same time, the risk of overheating and inflation is growing in emerging markets. A boom-bust scenario cannot be ruled out, requiring a further tightening in countries such as China and India. The knock-on effect would be slower growth in other regions.

Instability in sovereign debt markets poses another serious risk. It has highlighted the need for the euro area to strengthen its institutional and operational architecture. Bolder measures need to be taken to ensure fiscal discipline,” it’s clear that OECD takes these risks seriously.

“This is a critical time for the world economy,” said OECD Secretary-General Angel Gurría. “Coordinated international efforts prevented the recession from becoming more severe but we continue to face huge challenges. Many OECD countries need to reconcile support to a still fragile recovery with the need to move to a more sustainable fiscal path. We also need to take into account the international spill-overs of domestic policies. Now more than ever, we need to maintain co-operation at an international level.”

With a huge debt burden weighing on many OECD countries and the strengthening recovery, the emergency fiscal measures provided by governments to tackle the crisis must be removed by 2011 at the latest, the Outlook says. It adds that the pace of such action must be appropriate to particular conditions and the state of public finances in each country.

To support growth as budgets are being tightened, macroeconomic, financial and structural policies need to be linked. Spending cuts or tax rises should focus on areas that are the least harmful to growth. Fiscal rules could enhance the credibility of plans to strengthen public finances. Reforming product and labour markets to enhance competitively must also be part of the strategy.

Although economic activity is picking up, the growth in jobs is not keeping pace. The number of unemployed has risen by 16 million in OECD countries in the past two years.

The Outlook also contains some scenarios that go out as far as 2025, and which show that without strong policy decisions, growth will remain mediocre, unemployment and fiscal deficits high and imbalances persistent. As Leonard Cohen wrote “I’ve seen the future, brother, and it is murder”