Who Is Going To Win The Desperate Struggle For Economic Growth?
On October 4 Goldman Sachs cut it predictions for global growth in 2011 and 2012. The private investment firm now is expecting growth in 2011 to be 3.8% instead of 3.9% and in 2012 to be 3.5% as opposed to 4.2%. The epicentre of downhill strain on global growth is in The european union, where it expects the eurozone to move into a ‘mild recession’ over the 4th quarter 2011 to the first quarter 2012.
The report has made it even more difficult for those investors forex trading in the long-term to predict what might happen next on the global financial markets. And many have turned to the best spread betting companies to try more immediate, targeted intra-day trading.
Goldman decreased the UK prospects for the UK to 1.1% from 1.4% in 2011 and 1% to 2.3% in 2012. A comparable fate has been declared for the US economy that will increase 1.7% this year and 1.4% in 2012.
Goldman were only the most recent in a long list of firms to trim down world wide growth forecasts as policy-makers through the US, the eurozone, and the UK struggle to handle debt problems and worsening economic climates.
Taken in isolation, fundamental economic signals can now and again mislead, but when taken together over a long-term period they cannot lie. Annualised GDP numbers for the second quarter tend to be fragile and stand at 1.3% in the US, 1.6% in the eurozone and 0.6% in the UK. The unemployment rate is 9.1% in the US, 10% in the eurozone and 7.9% in the UK.
The Federal Reserve not too long ago introduced the creation of ‘Operation Twist’ in an attempt to keep long-term interest rates minimal and this was right before Fed chairman Ben Bernanke expressed that the US economy is ‘close to faltering’ in his testament to Congress. Further financial stimulus in the form of quantitative easing also seems to be likely now. In distinction, with election year looming, President Obama struggled to get his debt-ceiling remedy signed off and continues to have troubles with his new $447billion work opportunities bill.
The European Central Bank (ECB) has consistently held interest rates lower in order to attain its main responsibility of price steadiness throughout the euro area, however, as we have viewed, the ECB’s Governing Council have found it challenging to agree how to deal with the Greek dilemma. In the same way, any agreement on Greece amongst eurozone country financial ministers and leaders has proven extremely problematic as domestic voter cynicism involving the next two years of the eurozone continues to surge.
In the UK, the chancellor George Osborne has established that he could be thinking about a programme of ‘credit easing’ to help you small enterprises gain access to the loans they require for development as one technique to off-set the negative impacts of his intensive government spending cuts programme. The British Bankers’ Association instantly hit back proclaiming that it was the lack of confidence in current economic conditions not the availability of financial loans that was the determining factor. Whichever is right, the Bank of England has just pumped a further £75 billion into the UK economy as part of its QE programme.
The US, eurozone and the UK all have comparable financial problems but the success of any measures taken to try and reestablish economic wellness will primarily depend on strength of leadership and also the swiftness in which significant decisions can be decided upon and executed. And, for the time being, it’s tough not to conclude that of these three it’s the eurozone that looks the less likely to be successful in the increasingly anxious search for economic growth.