SILVER LINING
World stepping out of recession
Germany, France Out Of Red, 4
Of 5 Biggest Economies Growing
TIMES NEWS NETWORK
Some light appeared at the end of the recession tunnel on
Wednesday as France and Germany announced unexpected return to
growth. This means that now four of the world’s five largest
economies and six of the top ten are not in recession.
Adding to the sense of optimism, the US Federal Reserve left
rates unchanged, saying the world’s largest economy was showing
signs of levelling out. Economists had predicted a decline of 0.3%
for both France and Germany for the second quarter (April-June) of
2009, but they surprised themselves and the rest of the world by
announcing that they had in fact recorded growth of 0.3% each.
Among the five largest economies of the world measured in
purchasing power parity (PPP) dollars—which enables us to compare
apples with apples when discussing different economies—China and
India are already growing at healthy rates, even though these are
lower than their pace over the last few years. Japan too has
climbed out of recession, and now so has Germany. These economies
along with the US account for 47% of the world’s GDP in PPP terms.
The Eurozone as a whole is also now projected to have
contracted by just 0.1% compared to the 2.5% fall in GDP in the
first quarter (January-March). The growth rates reported by
Germany and France may not seem particularly exciting, but
considering that Germany’s GDP shrank by 3.5% in the first
quarter, and France’s by 1.3%, it’s quite a smart turnaround.
Among the world’s other large economies, Brazil is also now no
longer in recession, having grown by 1.5% in the second quarter.
Slowing job losses spur optimism on US economy
While four of the world’s five biggest economies, and six of
the top ten, are now not in recession, the UK, which is the
seven-largest, and Italy, which is tenth, remain in recession, as
does the US. The UK economy shrank 0.8% in the second quarter,
while Italy’s was down 0.5%. Unlike the UK, however, economists in
the US believe the worst may be behind them. “It’s quite possible,
though not certain, that retrospectively, we’ll say the recession
ended in July or August, maybe September,’’ Nobel laureate Paul
Krugman was quoted as saying.
There’s evidence that his optimism is not misplaced. The pace
of job losses in the US slowed more than forecast in July, and the
unemployment rate dropped for the first time in more than a year.
America’s GDP also shrank by just 0.3% (equivalent to an
annualised 1%) in the second quarter after a 6.4% drop in the
previous three months.
That explains why the US central bank is willing to bet that
the economy’s nosedive in recent months is a thing of the past.
Over the last two years, the US has witnessed its worst crisis in
decades, but it could be ending. This is good news for the world,
since the US accounts for a fifth of global GDP.
Oil prices jump on eco recovery
London: Oil prices rallied on Thursday on increased signs of
economic recovery in the US and Europe which could eventually
boost weak energy demand. Brent North Sea crude for delivery in
Sept was 61 cents higher at $73.50 a barrel in afternoon London
trade after spiking above $74 earlier in the day. New York’s main
contract, light sweet crude for Sept, advanced 47 cents to $70.63
a barrel. “Crude prices have continued to rise after the Fed
report and after better-thanexpected GDP data showed Germany and
France returned to growth in Q2, which fuelled optimism that oil
demand will increase,’’ said analyst Nimit Khamar. AFP
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