Pedro Videla: Good News for the Global Economy


Good News for the Global Economy

Contrary to what one might think, the world economy is experiencing full-swing growth after having overcome the slump of 2009, primarily thanks to development in emerging countries. As IESE professor Pedro Videla explains in this interview, the current challenges are recovery in the West and know-how for emerging markets in managing the problems they face.

The world economy is growing at 4 percent, following a decline in real GDP of 7 percent in 2009. This growth reflects overall resilience in the world economy, along with the continued expansion of emerging economies, says IESE Prof. Pedro Videla in this interview. "So the world economy is doing well," he says.

However, about 80 percent of growth in China has been mostly due to recent investments in areas such as infrastructure and real estate, which has boosted a demand for commodities from exporting regions such as Africa and Latin America. Meanwhile, Western Europe remains stagnant, threatening to create a "two-speed" recovery in the overall global economy, he said.

"Americans are not going to Wal-Mart like they were in the past, so this lack of demand of final product from China from the developed countries is also dragging down the growth of these (emerging) countries," he said. If the U.S. can make strides toward recovery in 2012, the country could regain its position as the key source of growth in the world economy. Subscribe now to IESE Economics Weekly and keep posted on our professors opinions on Economy: