Even for an intransigent optimist, it would have been impossible to fathom a global recovery within just a year or two after
the worst financial crisis, which originated in the US but soon hit the economies
of the world hard about a year ago. But now a sense of optimism is
prevailing that the crisis is nearing its end and that a recovery is not very far off.
"World growth can turn positive by the end of this year, and unemployment can
start decreasing by the end of next year,"
said Olivier Blanchard, IMF's Chief Economist. However, it will be a while
before the world leaders take corrective actions to help a battered economy
recover from what he calls competing crosscurrents, with the collapse in
confidence and demand continuing to pull the economy down and
government stimulus measures and natural stabilization mechanisms pulling
the economy up. "This is not the time for complacency, and the need for
strong policies, both on the macro and especially on the financial fronts, is as
acute as ever," he added.
But don't expect a uniform, an across-the-board recovery.
Strangely, the US which was at the epicenter of
the crisis, is expected to recover faster, while in Europe where banking
sector was hurt more (than in the US) it could take longer than expected. "The
shock originated in the US, but Europe is paying a higher price," New York Times quoted Jean Pisani-Ferry, a former
top financial adviser to the French government who is now director of Bruegel,
a research center in Brussels, as saying. In its latest World Economic
Outlook (April 2009), IMF forecasts Euro economy to shrink by 4.2%,
much ahead of US which is forecast to contract by 2.8% and the average
contraction of 3.8% for the advanced economies.
|
