The global economy is showing signs of strain. Though most of the major economies are growing; the United States to Europe and even to the booming China – evidences from all over the globe suggest that the world is struggling to expand as fast as they did last year.
IHS chief economist Nariman Behravesh said ?three headwinds are hitting the global economy at the same time?. High rates of unemployment, increasing oil prices, and depressed real estate are slowing the US economy?s momentum; while the European governments are struggling with debts and squeezed budgets. Germany, Europe?s strongest economy is showing signs of a slowdown while Japan has sunk back into recession.? And in China, interest-rate hikers designed to reduce the inflation are slowing the growth.
Financial markets have been registering a concern and a slowdown world over. Stocks have slid by almost three percent or more in Japan, Britain and Hong Kong. Along with this high commodity prices has been observed globally.
The leaders of the Group of Eight rich democracies met last week in Paris to address the slowing global growth issue. Concerns regarding instability in the Middle East were put forward in addition to Greece?s debt crisis and the debated hunt for the new International Monetary Fund head.
“A hard landing for the emerging markets could significantly set back the world economic recovery,” said Eswar Prasad, professor of trade policy at Cornell University. “They have been the key drivers of global growth in the aftermath of the financial crisis.”
According to a research published by IHS Global Insight, the world economy is likely to grow by just ?3.5 percent, down from the 4.1 percent last year. It is learnt that IHS has cut forecasts from 3.8 percent.
Michael Mussa, senior fellow at the Peterson Institute for International Economics, worried that rising rates will slow global growth well into 2012. “If there’s a worry, it’s what might happen next year,” he said.