LARRY SUMMERS: The global economy is facing a ‘dangerous’ situation
Akin Oyedele
BusinessInsider.com
Oct. 24, 2015
During HSBC’s Global Investment Seminar in New York this week, Harvard professor and economist Larry Summers brought up secular stagnation.
In 2013, Summers revived the phrase, which, over time, has come to mean all sorts of things to different people. But at its core, secular stagnation refers to a global economy growing at a slow rate because there is too much saving and not enough investment.
And right now, a lot of savings (and other monies) are heading out of emerging markets and into the developed world.
“I would suggest that the defining financial development of the last year is likely to push things towards more secular stagnation,” Summers said this week at the HSBC seminar.
“It is the substantial reduction in capital inflows to developing countries, and the substantial increase in capital outflows from developing countries.”
Here’s the chart from Summers’ presentation, which shows the decline in money coming into emerging markets.
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