How are world economies doing??
BBC has published a round up report of major economies of the world, what they are doing to fight the recession and how far they have succeeded in doing so. Refer to What shape are world’s economy in? Here is what it has to say about various countries:
UK: Cut Government Expenditure or cut Recovery?
The governor of the Bank of England Mervyn King fired a warning shot across the bow when he said the UK faced "choppy waters" ahead on its path to economic recovery.Growth forecasts have been lowered, both by the Bank and the government’s new Office for Budget Responsibility, but the consensus is still that the UK will keep growing this year and next, albeit at a slower pace. He also pointed out that with inflation likely to remain relatively high over the coming months, interest rates are expected to stay low until well into next year at least.
Europe: Growth being restored!!
In June, Germany’s exporters put in a stellar performance, selling 3.8% more goods than they managed in May. Sales are within touching distance of those achieved before the financial rot set in in 2008. Later we will learn how much German GDP grew between April and June. This could be by around 1.3% which equates to an annual growth of over 5% – twice the growth the UK is expecting.
Production in France was down 1.3% in June. The most noticeable drop has been in the numbers of cars being made following the end of the country’s car scrappage scheme. Nevertheless France isn’t on its uppers just yet. Most economists expect second-quarter growth to come in at around 0.4%.
Spain is not expected to grow much more than that in the second quarter – if at all. The truth is that despite the expected cheery news on growth, Europe is simply beginning to recover from the destruction of its economy.
US: Exhausted Policy Arsenals..what next?
The Federal Reserve, America’s central bank, said this week that the pace of recovery had slowed in recent months and was likely to be more modest in the near term. This comes on top of last week’s poor jobs report. American firms cut payrolls by 131,000 in July, the second month in a row of job losses.
Overall the US economy has been growing since the so-called Great Recession. In the last quarter, the economy grew at an annualised rate of 2.4%. But now some economists suspect that estimate may be too high.
Fed did reassure investors by pledging to keep in place more than $2 trillion (£1.3tn) of support. The bank may have to do more if the economy continues to worsen.
China: Growth engine of the world goes on!!
China is enjoying high wage growth in many sectors, moderate inflation and low levels of household debt which are helping to keep consumption levels healthy here.Chinese consumers are in fact expected to drive much of the country’s GDP growth this year.Fears that the economy is overheating are fading. There are those of course who fear the Chinese economy could suffer a "hard landing" if there’s a sharp downturn in the property market and the export revival turns out to be short lived.