2017 and 2018 are going to be reasonably benign for global economy: Willem Buiter, Citigroup

In a chat with ET Now, Willem Buiter, Chief Economist, Citigroup, says in India at least things will move in the direction of greater reforms and towards a more market friendly and outward looking policy. That would be good news for the world and to India.

Edited excerpts:


How are you seeing the world economic scenario right now and which are the pockets that are catching your eye at this juncture?

The economy is doing somewhat better this year than last year and we expect this slight improvement to continue into 2018. Most of the improvement for once is in the advanced economies. The emerging markets have improved only amongst some of the worst performers -- Russia and Brazil. Most of the EM countries continue to perform as expected including India and China. The risks to the global performance is mostly on the downside but our view is 2017 and 2018 are going to be reasonably benign for the global economy with trouble not really being likely until two years from now.

What is your take on India post the recent state elections? Are you feeling slightly more optimistic than before?

It clearly strengthens the position of the prime minister, the incumbent and raises the chances of the kind of structural economic reforms that India needs in land markets, labour markets, introduction of the goods and services tax, further selective relaxation of FDI, restructuring and recapitalisation of the banking sector etc. But it is still gradual and somewhat painful because in India even if a single party is in control of most of government, each party is itself a coalition and things move slowly and deliberately. But at least things will move in the direction of greater reforms and towards a more market friendly and outward looking orientation of policy. That would be good news for the world and to India.

Globally there seems to be a rush to buy commodities and commodity related stocks, what is your own view on the metal sector?

Clearly China is growing as well as expected, even slightly better and the reason for that is a massive traditional construction, infrastructure, SOE, capital expenditure, commodity intensive driven expansion. That should be supportive of commodities. Oil is, of course, a special case here as always because supply side factors, everything from restoration of Libyan supplies to an expectedly buoyant response of the US oil sector to OPEC managing to enforce production ceilings on non-OPEC members Russia and Iran. Oil is a separate game but most other commodities like metals should be doing reasonably well as long as global growth continues to pick up slightly as we expect and especially as long as China sustains its unsustainable growth model, it is commodity intensive growth model.