World Economic Outlook & Fed’s Long standing Dilemma

Hello Everyone, doing my first blog post from the Caribbean in front of the Atlantic ! Its an awesome view ! Tourists from the North America and elsewhere trickling  gradually on the beaches, enjoying a swim in the Ocean, Sun bathing with chilled drinks and sea food. Everything seems so nice. 
I wonder Ms. Janet Yellen the Fed Chairperson won’t think twice before raising rates if she happens to visit here, after all majority of tourists are from the US. If people can enjoy a nice vacation in the Caribbean then they can also bear the brunt of the rates hike. 
Then why is she delaying the rates hike? Some Economists say Fed is worried about things happening in China, others say the Fed is worried about market reaction to the hikes and slowdown in Emerging markets etc. There could be several reasons that could be attributed to the delay. No one knows how much percentage each reason contributes to the final decision making. 
If we start analysing the global economic situation by dividing it into regions, this is how it would look like:
1. China Slowing down – Everyone is worried about the dragon slowing its power of breathing fire. All this started with the so called Chinese act to clean up their system and make more structural changes.  
I wonder if China became such a superpower with a dysfunctional economic structure then what could it achieve with better systems in place. But certainly the Business class in China doesn’t believe so. Nonetheless the Chinese slowdown has badly affected commodity dependent economies such as Brazil, Russia, Australia, African and Latin Americans. Most of these countries were already suffering due to Oil price slowdown and have to face this double whammy now.
2. Emerging Markets Decelerating : The Emerging markets around the world have slowdown considerably in the last few months. The IMF clearly stating the same in its latest reports on World Economy. The EM’s are vulnerable to Commodity slowdown, currency depreciation vis-a-vis dollar and inherent sluggish demand. The private sector in most of these economies are heavily indebted with dollar denominated loans and can become vulnerable to a rate hike. The flight of capital from Emerging markets in anticipation of rate hike have caused havoc in some countries such as Indonesia and Malaysia. India is a rare exception. 
3. Advanced Economies Stagnating:  The US, Europe and Japan have their own problems of “secular stagnation” a term coined by Larry Summers the former Treasury Secretary. The inflation is no way near the 2% set by the respective central banks. Unlike the US the other two are still using one or the other instrument of monetary policy to stoke inflation. The US is worried about things happening elsewhere and circumspect of its own growth numbers. It fears the reaction of financial markets. 
The IMF clearly sees the world growth slowing and has cut its own earlier estimate of 3.3% GDP to around 3.1%. The IMF and the World Bank see systemic risk to the world economy and advised the Fed not to raise rates till 2016. The Fed has so far obliged to this call. There is still one quarter review left and analysts still belief there could be a hike in December 2015. Terrible timing as its the party time worldwide. I doubt the Fed would risk its reputation annoying people !!! 

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