Consumer Products & Services

World Economy Sees A Slow Recovery

Albeit at a slow pace, the global economy is steadily recuperating from a prolonged slowdown. Amid continued debate over the bottoming-out of the crisis, the green shoots of recovery seem to have gathered roots. France, Germany and Japan hav e reportedly come out of recession, posting positive growth in second quarter. Also, for the first time in two years, the IMF has raised its growth projections for the global economy. In its Mid-year World Economic Forecast, the agency predicted a 1.4% decline in global GDP this year, marginally lower than a 1.3% drop estimated in April; but forecasted a 2.5% growth in 2010, significantly higher than a 1.9% growth projected earlier.

In the U.S., better results from companies and lower-than-expected decline in gross domestic product (GDP) during the second quarter of 2009 (2Q-2009) have raised hopes that the economy is finally emerging out of recession. U.S. GDP fell by 1.0% in the second quarter – quite an improvement over a revised 6.4% fall in the first three months of the year. This was also better than the market forecast of a 1.5% drop.

However, Labor Department data showed a rise in U.S. unemployment rate to 9.7% in August, the highest in 26 years, from 9.4% in July. Non-farm payrolls declined 216,000 in August, after a revised drop of 276,000 in the previous month, and initial jobless claims in the U.S. slipped to 570,000 for the week ended August 29 as against the revised total of 574,000 reported for the previous week. The four-week moving average was 571,250, an increase of 4,000 from the previous week's revised average of 567,250. Although job losses continued in a number of major industries in August, the declines seem to have moderated in recent months.

According to former Federal Reserve Chairman Alan Greenspan, the recession in the U.S. might be ending and growth may resume at a rate faster than most economists forecast. In fact, he expects the economy to grow by up to 2.5% in the third quarter.