Politics to blame for 2012's economic woes

Politics to blame for 2012's economic woes
Above photo is Congress general secretary Rahul Gandhi (wearing turban) greeting party leaders at an election rally in Sanand, Ahmedabad district.

Economist forget most of the time that it is politics that drives economics.

That is the lesson of the about-to-be-completed 2012.

In two articles, one today and the other next week, I will suggest how politics turned 2012 into such a difficult year and how it will take politics to move the global economy forward in 2013.

As 2012 draws to a close, it leaves the global economy in an unexpected place.

Structurally, it looks very different from what was expected at the beginning of the year.

Based on previous post-recession experiences, recovery from the Great Recession of 2007-2009 should have been more pronounced than turned out to be the case.

The United States grew at a rate of one to 1.5 percentage points lower than most experts had predicted.

By the end of 2012, most of Europe is back in recession.

Japan's GDP (gross domestic product) growth has not moved much beyond a zero growth rate.

What is most disappointing is the loss of growth momentum in the BRICS (Brazil, Russia, India, China and South Africa); all of them slowed down to the point where they ceased to act as the engine that was supposed to pull the rest of the global economy at a faster clip.

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