Thursday, October 19, 2017

World economy picks up after decade of stagnation

  • Roving Correspondent, Toronto,
    Published: 2017-03-20 03:46:51 BdST

Representational Image: Undated Reuters File Photo shows a worker measuring a rose at a plantation in Tabacundo, Ecuador.

The world economy has finally started to grow after about 10 years of stagnation and a series of ‘false economic dawns.’

“Today, almost ten years after the most severe financial crisis since the Depression, a broad-based economic upswing is at last under way,” The Economist reported, referring to latest economic indicators.

“In America, Europe, Asia and the emerging markets, for the first time since a brief rebound in 2010, all the burners are firing at once,” the report says.

The data shows that the American economy has kept growing for the past several quarters, though it faces the headwinds. The US Federal Reserve last week raised rates for the second time in three months while fears about Chinese overcapacity, and of a Yuan devaluation, have receded.

“In February factory-gate inflation was close to a nine-year high. In Japan in the fourth quarter capital expenditure grew at its fastest rate in three years,” the report says.

“The euro area has been gathering speed since 2015. The European Commission’s economic-sentiment index is at its highest since 2011; euro-zone unemployment is at its lowest since 2009.”

The Economist analysis also showed that in February South Korea notched up export growth above 20 percent. "Taiwanese manufacturers have posted 12 consecutive months of expansion. Even in places inured to the recession the worst is over.”

“The Brazilian economy has been shrinking for eight quarters but, with inflation expectations tamed, interest rates are now falling. Brazil and Russia are likely to add to global GDP this year, not subtract from it,” according to the Institute of International Finance. It reckons that in January “the developing world hit its fastest monthly rate of growth since 2011”.

However, the Economist cautioned that “it does not mean the global economy is back to normal.”

It pointed out “oil prices fell by 10 percent in the week to Mar 15 on renewed fears of oversupply; a sustained drop would hurt the economies of producers more than it would benefit consumers.”

“China’s build-up of debt is of enduring concern. Productivity growth in the rich world remains weak. Outside America, wages are still growing slowly. And in America, surging business confidence has yet to translate into surging investment.”