Prognosis for the global economy in 2012 remains bleak notwithstanding some improvement in the United States. Recently, IMF chief Christine Laggard reiterated that the world economy is in a dangerous situation. It is doubtful that the accord the European Union leaders struck at the December 9 summit for deeper economic cooperation in the euro zone will stem the debt crisis that began in Greece in 2009 and now threatens to engulf even France and Germany. In the U.S., there are signs of recovery across a number of parameters. Retail sales have been strong; spending on discretionary items has picked up; and the unemployment rate has dropped to 8.6 per cent. But then, there are also worrying factors. The housing sector, from where the global economic crisis originated, remains in a moribund state. The unseemly political divide between Democrats and Republicans has stalled the progress of important enactments and the budget. Even the employment figures do not look that good, if the 300,000 people who have opted out of the workforce are taken into account. Emerging economies — India and China, among others — who were the growth engines for the world economy are slowing down. As a recent UNCTAD report points out, the developing world is both unable and unwilling to accept the role of debtor of last resort.
For the global economy to mend, the leading economies must make the right policy choices and work concertedly. The key policy debate has been on whether to go back to the expansionary policies that had helped to ward off the worst symptoms of the crisis or to opt for the now-fashionable economic austerity. During 2011, most advanced economies changed course and opted for fiscal restraint which they hoped would improve the private sector's confidence and set off a wave of private investment and consumption demand. But new data from some important countries that took this route point unambiguously to a recession in 2012. Private sector confidence is touching new lows, as demand from the government and from public sector is sliding relentlessly. UNCTAD argues that, in the prevailing environment, fiscal austerity will make matters worse, not better, in the advanced economies. For most of them, high unemployment is a more pressing problem than fiscal imbalance.
Keywords: world economy, unemployment, euro zone crisis, recession
A youth US Tamil participant Anjali Appadurai has said that "Politics is very frustrating" in the Climate Conference in South Africa. Global problems are due to incompetent, double standards, Apartheid and greedy politicians. Among them they cover up crimes and human rights abuses committed by other cozy politicians. World problems will continue to increase as the US, EU and UK are in economic downturn and it is unlikely improve due to mockery policies. If anyone believe in God, how can God help these leaders and nations when they collaborating and committing crimes against humanity?
The IMF chief is Christine Lagarde, not 'Laggard'.
Let there be slow growth in world comprising of some growth in developing countries and no / low growth in developed world. This will correct economic imbalance in world and reduce wasteful consumption in developed world. Besides it will force people in developed world to innovate and develop new technologies in energy and manufacturing, which will be good for human kind.
ya the situation is getting good now but the exact situation is not worth while.indian rupee is getting strong and the demand for doolar is lessening.the share market is building confidence and the investor in indian economy are helping us the lot.the crisis which is continuation of 2008 recession is cstill continuing .most of the european countreies are under debt burden and yes the world power is also the victim of the same.
Kudos to your team for a great article.There is minor improvement but the challenges remain formidable.The housing sector is still in moribund state a matter of great concern as Global financial crisis in 2008 arose from it. We need to have a clear cut action path rather than just pondering over problem for too long.Here India,china and other top countries have missed the trick due to lack of Global Economic leadership.With the demise of USA, and rise of India and China, its say is not the last word anymore.india needs to take up Global leadership to resilve the issue.Our PM must think outside the box.He is still grappling with issues at home even 7 years into the office.He should quickly put his house in order and focus of how India can global Economic leadership.
lethal blow to the growth of the Indian economy has been the woolly-headed action of the central bank,RBI,who thoughtlessly repeated a single policy action for thirteen times without giving a thought to' if growth suffered,what will replace it'.What has happened is investor money of the order of more than nine lac crore has been shaved off the investment amount due to a depleted share market,all in the name of curtailing inflation.Inflation in the first instance was the bill produced lethal for the proficacy of the government and inorder to conceal the bill from the eye of the public the RBI,in collusion with the government,resorted to the subterfuge of interest rate hike,maiming the nation as a result. As Paul Krugman writes in the op-ed article America has the advantage of the willingness of investors to pay America to hold their money and what we have.A fast eroding rupee,of course,every one wants to divest as quickly as possible.
since, from collapse of Lehman Brother in august, 2008, there is no sign of strong and persistent recovery of US economy. The austerity measure taken by developed countries like Greece and US has not resulted into intended result. The inflation in India and China, and also the slowing down of their export is sign of slowing down of their economy. This clearly depicted in the UNCTAD report. It is the high time for whole world to act in co-ordination and make their foreign policy which, should be conducive to current economic situation.
The rich countries and classes have to choose austerity in stead of extravagant life style and huge profit margins and in the same breath have to raise the purchasing power of the poor through raising employment and employable skills through pro-poor policies. India and China must take the lead in this endeavour as they constitute nearly one third of world population.They have to take Africa and Latin America along with them and leave the Europe behind to suffer the results of its bankrupt philosophy and economic practices.
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