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Wednesday, June 1, 2011

Global Countries' growth started shrinking after a boost. Is it a start of recession part II

As the world economy has started recovering from a recession, after a huge slowdown from 2008, many countries' GDPs have started shrinking for one or another reason.

As per the current reports from different governments, countries are logging a slow GDP growth than the forecast including developing economies like China & India.

India's GDP growth slowed down to 7.8% in the fourth quarter (January to March) as against 8.2%, on quarter-on-quarter (QoQ) basis, mainly due to poor performance of the manufacturing sector. High inflation and raw materials prices add more pressure to growth.

Same factors  witnessed in China Manufacturing Index slow down as it hits 9 months low to 52 from 52.9 in April. High inflation, rising yuan and government's efforts to control the price hike adding up to the slow down.

Australia's economy shrank 1.2 percent in the first quarter, suffering its biggest decline in 20 years, after extensive flooding hit coal exports. Data on Wednesday showed annual growth in gross domestic product (GDP) slowed to a tepid 1.0 percent, down from 2.7 percent.

Another report from Financial Times showed that UK consumer recovery post recession will be slowest in the history of 180 years, as consumers are not willing to spend more due to inflation and high fuel prices. Read More

US is already struggling with inflation, debt, defaults, housing double dip and a very slow economic recovery without clear direction as Fed is hesitant to confirm the recovery and kept its borrowing rate to a record low to make consumers spent more. Also,latest reports showed US manufacturing growth is at lowest level since September 2009 and Private sector job growth was far less than expected Read More.
Read all economic events summary here.

All these factors might add up a question that are we headed for Recession Part II? Nobody knows but if we see the last history of recession in 2008, one or more big financial institution melt down like Lehman Brothers certainly spark a fear about the economy and send stock markets lower.

Copyright Stockinvestips


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