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Eastward shift


5 November 2016, London

November Cover (1)

The world’s centre of economic gravity is shifting east. Following impressive rates of economic development, Asia's influence is now spreading to areas beyond trade and investment, including financial flows, global currency reserves, and banking and capital market supervision and regulation. On 16 November, OMFIF is opening its first overseas office in Singapore. Adam Cotter, OMFIF’s Head of Asia, outlines our forthcoming activities in the region.

October saw the renminbi’s inclusion in the International Monetary Fund’s special drawing right. While the dollar’s dominance will take a long time to fade, as Steve Hanke and Javier Guzmán Calafell note, a move towards a multicurrency system in which the renminbi is a protagonist is inevitable. This month’s Focus Report, with contributions from Le Xia, Yaseen Anwar, and OMFIF’s own research staff, highlights the growing systemic nature of the renminbi swap network.

The outlook for the renminbi will be driven by China’s economic trajectory. Following fears of a hard landing earlier this year, November’s Advisory Board Poll sets a calming tone: only 6% of Advisory Board members expect China to experience a recession over the coming five years.

China’s investment push can be emulated by other economies in the region. Ashfaque H. Khan discusses the lessons for Pakistan. However, to manage its own transition, it will need to apply its expertise and resources in infrastructure investment to other regions as a result of diminishing returns domestically. We outline the potential benefits of China's 'One Belt, One Road' initiative. Shaokai Fan examines the potential for growth in gold demand from Asia’s rising middle class.

Japan remains a notable exception to Asia’s economic dynamism: John Plender outlines three problematic scenarios for the country's debt trap. While not as high as Japan’s, Greece's debt to GDP ratio is troubling, warns Danae Kyriakopoulou. Looking to Tuesday's US election, Marsha Vande Berg warns against a return to protectionism. Ben Robinson underlines slow progress in EU services liberalisation and says Britain's departure will increase incentives for other countries such as Poland to press for simplified regulations. Roger Bootle’s and John Mills’ book, The Real Sterling Crisis, earns a glowing review from Brian Reading. We also review Citizens' Wealth, by Angela Cummine.

Other highlights of the November 2016 edition:

Adam Cotter outlines the prospects for regional integration in Asean.

Alberto Osnago, Nadia Rocha, and Michele Ruta examine the changing nature of preferential trade agreements.

Abdul-Nashiru Issahaku highlights the role that mobile banking can play in Africa’s economic development.

Darrell Delamaide argues that inflationary pressures will lead the Federal Reserve to raise interest rates in December.

Shaun Kingsbury presents the case for investing in offshore wind.

The Bulletin is available to OMFIF members, and to non-members on a subscription basis. To subscribe please contact: membership@omfif.org