I chose this title to accurately describe three potential headwinds to economic expansion around the globe in 2011 not necessarily because I believe they will play out. Rather, they are concerns to understand and put into perspective. I gained further perspective on them last week at the Economic Club of Phoenix luncheon with William Glavin, Chairman, President and CEO of Oppenheimer Funds and found the information worth sharing.
Trade protectionism – Countries often protect their economies in times of recession my imposing trade restrictions. Although we have seen little thus far, it may become more of a problem as pressure to improve unemployment and frustrations from a “slower than desired” recovery continue. World Trade Organization efforts have slowed making this a valid concern. Global economic growth will require further work on efficient trade policies.
The BRIC – Brazil, Russia, India, and China continue to show great economic potential and will undoubtedly carry more and more weight on the world stage. The promotion of and acceptance of “their agenda” may not always mesh with U.S. economic policy causing headwind if not turbulence as these new powers find footing in their new roles.
Note: The growth of these regions does not in itself concern me; it rather excites me as there are numerous investment opportunities there. The potential conflicts as wealth and power shift and the U.S. response toward it is the concern here.
Global regulation – The financial crisis certainly brought forth regulatory issues. Tighter regulations, lack of vision and clarity of what is needed, and differing viewpoints from world banking entities are destined to cause some volatility in capital markets. Our ability to think forward and work as a team will most likely determine the strength of these headwinds.
The International Monetary Fund (IMF) website at www.imf.org has additional information on these and other economic issues should you wish to read more.
Have a great week!