- After an eventful Q1, Q2 did not bring much new aside from some eye opening political events that don’t really affect the world economy but are indicative of the direction of change. India, for the first time in 30 years, has given a single party, the BJP, the absolute majority in parliament, with reformist Mr. Modi at the helm. There are even signs of a rapprochement with arch enemy, Pakistan, as the Pakistani Prime Minister, Sharif, has accepted, albeit after a few days delay to think about it, an invitation to Mr. Modi’s inauguration. Could this be the impetus India needs to set off down a path to rival China’s growth? If so it could also be the most momentous happening for global growth for the next decade.
- Euro-sceptics won significant ground in the Euro-parliamentary elections, now controlling some 30% of the vote. They may not have the power but it will push more moderate leaders to rethink their positions to cater to this part of the populace. As long as the sceptics don’t fully get their way the outcome is probably good for Europe as the Euro-parliament may focus on topics of more substance.
- In Thailand a military coup ousted the government. Interesting is that this was with the approval of the king. At any rate “all is not well in the state of Denmark”. The sad thing is this shows how quickly what was once an exemplary emerging market country can deteriorate.
- The last thing we would like to mention is the gigantic gas deal which Russia has struck with China. Russia may also have concluded from the Ukrainian adventure that they shouldn’t be too dependent on the west. While it may still take quite some time before the deal is consummated Russia it does not make for a more moderate Russia but a Russia that can pursue its goals with less risk. The Russian annexation of Crimea continues, Crimea voted to join Russia but the vote was not recognized by the rest of the world. This will no doubt drag on and could escalate to more meaningful sanctions. …
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