Sunday, September 9, 2012

>Does the world have the economic policy weapons to combat a new global recession?

It is not out of the question that the world is once again entering a global recession, due to:

the crisis in the euro zone and in the United Kingdom;
the marked slowdown in the US economy;
the continuing stagnation in Japan;
problems with the growth models of large emerging countries;
the spreading of the crisis to open economies via global trade.

In OECD countries, there is no room for manoeuvre either for fiscal policies or for monetary policies.

As for emerging countries, more expansionary fiscal and monetary policies are possible; but will they help the global economy:

if emerging countries’ problems are structural;
if they lead to a sharp depreciation of the exchange rates of emerging countries?

To read report in detail: GLOBAL RECESSION