The International Monetary Fund (IMF) has once again downgraded the outlook for the global economy, cutting projected growth internationally from 3.3% to 3.1%. The primary cause of the downgrade is slower growth in emerging markets, not helped by China’s significant deceleration and subsequent stock market crash. More than six years after the financial crisis, there’s serious reason to question whether the current economic paradigms can produce long-term global prosperity.
Growth is at its lowest level since the 2008 financial crisis with the IMF warning of the risk of global recession. China’s slowdown has caused a reshaping in the demand for global commodities hitting prices, and the developing economies that rely upon exports, hard. Throw in modest U.S. growth and a relatively weak recovery in Europe, and it becomes difficult to see where future prosperity might come from.
The circular economy is one alternative model currently gaining traction. It is less susceptible to the volatility of commodity prices and the Ellen MacArthur Foundation’s recent report, Growth Within, outlines the possibility of a new paradigm for prosperity for Europe, where economic growth is created through the maximisation of existing assets. The opportunity is especially nascent for Europe’s economy, which currently relies heavily upon imported resources and where Growth Within revealed that only 5% of original material value is currently captured.
A circular vision is less well developed in emerging markets, though a recent article written by Remy Le Moigne on Circulate highlighted some of the early opportunities. An inability to rely on increasing exports may well necessitate an exploration in those economies for innovative ways to ensure continued development.
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