Despite strong growth figures recorded in the Europe, Germany in particular, and the United States economic growth in both regions will remain at slow pace as per the IMF chief economist Olivier Blanchard. His remarks were published on Monday in a French newspaper Le Figaro, Reuters reported. He reiterated that the euro zone governments should deliver credible plans so as to reduce their budget deficits for medium terms. Instead of stipulating target dates only the contents of the plans would reassure financial markets about the financial health he remarked. “Whether it is 2013 or 2014 is not important,” he said.
Impact on Asia
A slowdown in the US would have automatic impact on growth in the short term Mr. Blanchard was quoted as saying. He might be referring to the dependent on exports to the US of the major players of Asia China, Japan and India. Exports from the three countries are majorly destined to the US and hence the impact. China recently concentrated on developing domestic market to relieve itself from depending on exports to the US. Japan market is already saturated and the haunting deflation for Japan is preventing it to shift priorities in trade it seems. Decreasing prices prevent consumers to come to shops as they expect the prices may further slip. That is making hard for Japan to increase consumer spending.
China slows to cruising speed; India perks up | Reuters 02/08/2010 | 11:24am IST
China’s manufacturing sector cooled further in July, even shrinking by one measure, but markets took the news as a sign of a desired slowdown rather than a harbinger of a slump that could derail global recovery. Manufacturing surveys from other big emerging economies India and Russia, also served to bolster investor sentiment, with Asia’s third-largest economy marking its 16th month of expansion and Russia’s activity improving for the seventh month in a row. HSBC survey of Chinese companies showed on Monday that manufacturing activity fell for the first time since the depths of the global downturn in March 2009, while a similar government survey published on Sunday showed a marked dip in growth.
A marked slowdown in U.S. growth in the second quarter heightened market concerns about the strength of recovery in the world’s biggest economy, leaving investors betting on China and the rest of Asian to pick up the slack. One concern is that Asia, which has led the economic recovery, could lose traction if the authorities in Beijing pulled on the reins too hard, hitting demand in what has become a top export market for many of China’s regional peers. The economy already slowed markedly from April to June, expanding at a 10.3 percent annual clip after 11.9 percent growth in the first quarter. HSBC, however, played down fears that world’s prime growth engine, poised to overtake Japan this year as the second largest economy, might be sputtering. “We still expect the economy to grow by around 9 percent in the second half of 2010 and 2011, driven by resilient private consumption and continued investment demands of ongoing infrastructure and new public housing construction projects,” HSBC economists Qu Hongbin and Sun Junwei said in a note. Continue reading