Dhaka, Bangladesh
World economy picks up after decade of stagnation

World economy picks up after decade of stagnation

TORONTO, Mar 20: The world economy has finally started to grow after about 10 years of stagnation and a series of ‘false economic dawns,’ reports bdnews24.com. “Today, almost ten years after the most severe financial crisis since the Depression, a broad-based economic upswing is at last under way,” The Economist reported, referring to latest economic indicators. “In America, Europe, Asia and the emerging markets, for the first time since a brief rebound in 2010, all the burners are firing at once,” the report says. The data shows that the American economy has kept growing for the past several quarters, though it faces the headwinds. The US Federal Reserve last week raised rates for the second time in three months while fears about Chinese overcapacity, and of a Yuan devaluation, have receded. “In February factory-gate inflation was close to a nine-year high. In Japan in the fourth quarter capital expenditure grew at its fastest rate in three years,” the report says. “The euro area has been gathering speed since 2015. The European Commission’s economic-sentiment index is at its highest since 2011; euro-zone unemployment is at its lowest since 2009.” The Economist analysis also showed that in February South Korea notched up export growth above 20 percent. “Taiwanese manufacturers have posted 12 consecutive months of expansion. Even in places inured to the recession the worst is over.” “The Brazilian economy has been shrinking for eight quarters but, with inflation expectations tamed, interest rates are now falling. Brazil and Russia are likely to add to global GDP this year, not subtract from it,” according to the Institute of International Finance. It reckons that in January “the developing world hit its fastest monthly rate of growth since 2011”. However, the Economist cautioned that “it does not mean the global economy is back to normal.” It pointed out “oil prices fell by 10 percent in the week to Mar 15 on renewed fears of oversupply; a sustained drop would hurt the economies of producers more than it would benefit consumers.” “China’s build-up of debt is of enduring concern. Productivity growth in the rich world remains weak. Outside America, wages are still growing slowly. And in America, surging business confidence has yet to translate into surging investment.” Reuters from Beijing adds; China’s Finance Minister Xiao Jie, who attended last week’s G20 meeting, warned that momentum seen in the global economy could be curbed by policy uncertainties and the rise of protectionism. G20 finance ministers and central bankers, in their communique issued following a gathering in the German resort town of Baden-Baden, dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States. Instead, they merely made a token reference to trade in their main communique by saying the G20 would work together to strengthen the contribution of trade to their economies. “Markets are currently worried about the uncertain policies of some developed economies, and are concerned that the rise of protectionism could adversely affect the (global) economic recovery,” Xiao said, according to a post on the Chinese central bank’s website late on Monday. He did not identify the developed economies. By contrast, at the gathering in the Chinese city of Hangzhou in September last year, G20 leaders agreed to work harder to build an open world economy, reject protectionism, and promote global trade and investment. To ensure the continued recovery of the global economy, countries should conscientiously implement the outcome of the Hangzhou summit, strengthen macroeconomic policy coordination, keep promoting global trade and investment, and oppose all forms of protectionism, Xiao said. In the same post, the People’s Bank of China’s Governor Zhou Xiaochuan, who was also in Baden-Baden for the G20 event, said the Chinese economy was in good shape overall, and reiterated that monetary policy would remain prudent and neutral.

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