By Jeremy Gaunt
LONDON, Oct 6 (Reuters) - When Christine Lagarde, the
International Monetary Fund's no-nonsense boss, spoke to Harvard
University this past week, she had some good news: nearly 75
percent of the world is experiencing an economic upswing.
Why, then, was her speech given the somewhat bearish title
"A Time to Repair the Roof"?
One reason is that the IMF has to worry about everyone, not
just those who are doing well. If nearly 75 percent of world
economies are growing, more than 25 percent are not.
Some of the strugglers - not for the first time - can be
found in Africa, where the two biggest economies, Nigeria and
South Africa have only just crawled out of recession and could
still be teetering.
The IMF's last outlook for the sub-Sahara region suggests
2017 growth of 2.6 percent - around a full percentage below that
for the world as a whole and less than half the 1999-2008
average of 5.6 percent.
"The recovery is not complete," Lagarde told the Harvard
audience. "Some countries are growing too slowly, and last year
47 countries experienced negative GDP growth per capita."
This brings up a second reason for Lagarde's tempered
celebration of recovery - inequality.
There is no question that the gap between countries has been
narrowing, as Lagarde told the Harvard glitterati. China, Brazil
and India, for example, are now major economic players. But
within economies themselves there are many left behind.
Most of these are the "bottom billion" described by
economist Paul Collier in his 2007 book of the same name -
people completely untethered to the global economy and any
wealth it might bring.
But others in advanced economies - though relatively less
poor - are now railing against being left behind. They range
from Britain's public servants to primary school teachers in the
Netherlands and nurses in parts of Australia.
The election of Donald Trump as U.S. president, Britain's
vote to leave the European Union, and the rise -- albeit modest
-- of the far right in Germany are all widely viewed as
reflecting disaffection brought on by the unequal share of the
global economy's spoils.
Hence, Lagarde's focus on what needs to be done right now:
rich countries should spend more, central banks should
communicate more clearly and public debt needs to be brought
It also explains the title of her address, a riff on John F.
Kennedy's comment: "Pleasant as it may be to bask in the warmth
of recovery... the time to repair the roof is when the sun is
It is not unrelated that the euro zone - barrelling along a
surprisingly smooth growth path - finds itself facing two
potentially destructive threats.
The first is the possibility in the coming week that
Catalonian separatists will declare unilateral independence from
Setting aside the politics, such a move could strip nearly
20 percent off Spanish GDP - a bit like California and Florida
together cutting loose from the United States.
How the European Union would handle such a things would
simply add to its Brexit headache. Rump Spain would retain its
place in the top four of euro zone economies, but much
The second hit would come if eurosceptics - some of who want
to leave the euro zone -- gain power in Italy at an election
that must take place next year.
Germany's economy is steaming ahead - latest data:
industrial orders soaring in August - and in France, the
official statistics agency has raised its 2017 growth outlook to
the highest since 2011.
But they cannot carry the load alone, one reason, perhaps
for the European Central Bank's softly-slowly approach to
pulling back stimulus.
(Reporting by Jeremy Gaunt, editing by Larry King)
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