|
Joseph Stiglitz
Nobel Laureate in Economics |
By Lee Hyo-sik
Staff Reporter
Nobel Laureate in Economics Joseph Stiglitz said Wednesday that the global economy has escaped from the worst but continues to reel from the fallout of the worldwide financial market turmoil, adding the world has a long way to go before a genuine recovery.
On the sidelines of an international forum hosted by the Organization for Economic Cooperation and Development (OECD) and Statistics Korea in Busan, he told reporters that the U.S. financial market still remains in the doldrums, adding government-led aggregate demand increases around the world are only temporary and cannot be sustained.
``My view is that we are much better off than we were a year ago after the crash of Lehman Brothers. But we are nowhere near a robust global recovery,'' Stiglitz said.
The economist said it was premature to discuss when to begin withdrawing a range of stimulus measures aimed at bolstering the sagging economy. ``Different countries are at different stages in the recovery but certainly, it is too early for the U.S. and Europe to implement an exit strategy. The real worry right now is the U.S. and that there are serious bumps in the road ahead.'' Among others, he pointed to the surging jobless rate and credit card default rates in the world's largest economy.
Stiglitz also said Asia's relatively fast growth can be attributed to stimulus steps taken by individual governments and rising demand from China, stressing Asia's resilience is not enough to pull the entire world out of the downturn, given its small economic size.
``All Asian economies have benefited from strong growth in China and strong stimulus measures. Some of the other Asian countries have put in place very good economic policies. The result is that economies like Korea have done among the best in the OECD. There has been a kind of decoupling where Asia has been able to recover faster than Europe and the U.S. But Asia is still too small from an economic point of view,'' he said.
Touching on the globally weak dollar, Stiglitz said the greenback will continue to head downward for the time being, given the huge U.S. trade deficit and global trade imbalance. ``If Europe is hit hard by another financial turmoil, the dollar could turn strong. But for now, the key currency will likely remain weak.''
Commenting on Korea's hosting of the G20 summit in November 2010, he said the meeting is an important change and a ``step forward'' at a time when many issues facing the world cannot be addressed by just a few advanced nations.
``The G20 is the important reflection of the changing global system. Transition from the G8 to the G20 is very important step. You could not deal with the global environment with just eight countries,'' the economist said.
Earlier in the day, Stiglitz said in a keynote speech that a new index that can measure the true state of the economy must be developed to replace gross domestic product (GDP) and other conventional measures of wealth and economic well-being.
``GDP has failed to accurately reflect true economic conditions. In 2007, the U.S. economy looked strong in terms of GDP but it crashed hard the following year, proving the index is not a proper tool to assess the state of the economy. We should come up with a new index that can precisely measure the level of sustainable growth,'' he stressed.
leehs@koreatimes.co.kr
|
