The global economy is expected to see growth improve this year, although significant risks, including possible capital market volatility and asset bubbles, still remain.
This forecast was made in the 2014 global business outlook issued by the B20 Coalition at its annual meeting in Paris on Tuesday.
“The global economic recovery is underway at a modest pace this year, with the private sector creating jobs, innovating and investing again,” said the body representing 15 of the largest private business organizations from the G20 countries. In Korea, the Federation of Korean Industries, a big business lobbying group, holds membership in the B20 Coalition.
This marks the first time the global business community has projected economic growth in the six years since the global financial crisis in 2008. The pattern of recovery, however, is expected to differ between developed and developing countries.
“Advanced economies are starting to accelerate from subdued levels, even if problems relating to currency stability and exchange rates remain. Emerging economies, where growth has slowed, are facing challenges,” the B20 Coalition outlook said.
Despite the resumption of growth, the global economy will continue to be exposed to significant risks. Members of the B20 Coalition said exchange rate volatility, associated with capital market volatility, will remain a high risk to the global economy this year.
“When quantitative easing ends, the resulting capital outflows from developing countries may lead to exchange rate volatility and depreciation around the world,” they said.
To deal with this risk, the B20 Coalition urged G20 countries to communicate their monetary policies clearly and to improve consistency in the mandates of major central banks to avoid major disruptions in international capital flows.
In addition to the challenge of slower growth, there is also a big risk of asset bubbles due to excess liquidity.
There are also uncertainties surrounding the implications and implementation of new regulatory regimes, which are designed to prevent similar financial and economic crises in the future, the B20 Coalition added in its first global business outlook.
On the other side of the coin, an emerging new consumer class in developing countries and a fast-growing digital economy will offer global companies opportunities for growth.
To maximize the potential of these fresh elements, the B20 Coalition urged the G20 and individual governments to assist in the private sector’s efforts, not only through budgetary discipline, but also by removing international and national barriers to business activity and improving international coordination in key policy areas.
The B20 Coalition was created to provide a voice to the global business community in the process of policy coordination by G20 member countries last year. It plans to develop more activities and projects for its members, and convene its annual meeting at one of its member firms from 2016, separately from the venue for the annual G20 summit.
“The Korean delegation, led by FKI executive vice president Lee Seung-chul, will present Seoul as the venue for the 2016 annual meeting for the B20 Coalition members,’’ an FKI official said.
Member business organizations of the B20 Coalition include the U.S. Chamber of Commerce, Federation of German Industires, Canadian Chamber of Commerce, Confederation of Indian Industries, Confindustria (Italian employers’ federation), National Confederation of Industry Brazil and FKI.
By Seo Jee-yeon (firstname.lastname@example.org)