Monday, August 20, 2012

THE BIG FIVE: ECONOMY

The IIPM Think Tank analyses the five largest economies (excl. China) – US, Japan, Germany, France, UK

European economies have given mixed results. Even though the German economy shrank last year by 5%, experts predict a growth of 1.5% this year (that means an absolute positive shift of 6.5%). Five leading think tanks commissioned by the government provided the silver lining with facts like growth in industrial orders, recovering exports, rise in business confidence, reduced layoffs and unemployment level being at par with the fall of 2008. Unemployment level is expected to dip slightly next year to 7.9% from 8.1% this year, compared to 8.2% in 2009.

Britain’s economy grew by a weaker than expected 0.2% in the first quarter of 2010, a rise of 0.4% over the previous one. Its GDP also shrivelled by 0.3% in the first quarter. France’s GDP dipped by a negative 2.1%, with unemployment at 10.1%.

Although the second largest global economy Japan’s real GDP in 2009 fell by 5%, its GDP actually grew by 4.6% in the last quarter of 2009, which is better than projected by the government’s preliminary report. It has been augmented by export rise in Asia and increased domestic demand supported by government’s incentives. In the third quarter last year, Japan’s economy expanded by 1.1% in absolute terms, which beat the average forecasts of 0.9% quarterly rise, according to Kyodo News survey. This quarter also witnessed a rise in consumer spending to the tune of 0.7%, the highest in last 7 quarters. In December, even though the industrial production grew by 2.2% and capital spending by 1.0%, public investment declined by 1.6%.

With oil prices hovering peacefully around $80 per barrel, with US and Japan leading the way in turning around, EU showing latent promise for the current year, and with the BRIC economies steaming ahead in their growth ambitions, it can be safely said that although pristine recession is over, the effects of the same will continue lingering across economies for the next six quarters at least.


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