The World Is Stuck With Persistent Stagnation

Economists expect the world economy to be more resilient than any of its parts, with recessions typically affecting only a few of the 200 economies at a time. Yet the world is gradually following the pattern of Japan, the world’s third largest economy, in struggling with persistent stagnation, explains economist and Yale faculty member Stephen Roach. For economists, the term “secular” describes long-running trends that are difficult to shake. With ongoing shocks, he warns, the probability of a relapse into recession runs high. “There is no quick fix for the globalization of secular stagnation,” Roach writes, pointing to failure to embrace well-known and needed reforms. “Only nations that face up to the heavy lifting of rebalancing and structural change will come out in better shape, with the wherewithal and resilience to withstand the inevitable pressures of the next crisis.” – YaleGlobal

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