Return to balance will come dropping slow

Cautious optimism is in order, but pursuit of sustainable patterns of equitable and inclusive growth will be a defining feature of economic policymaking worldwide in 2014, says Michael Spence.

ASSESSING the recent past and looking forward to the near term is a natural end­of­year exercise. When it comes to the global economy in 2013 and 2014, it may well be a necessary one as well.

In the past year, systemic risk declined. Europe came together around the need to stabilise the eurozone, with the ECB and Germany playing the leading roles. China’s leadership transition was completed and a relatively clear policy direction has been established, featuring a more level playing field for the private and state sectors and an expanding — indeed “decisive” — role for markets. Germany’s general election pointed to policy continuity, though an extended period of slow growth and high unemployment seems unavoidable.