International Economic Outlook

INTERNATIONAL ECONOMIC OUTLOOK By Evangelos Otto Simos, Ph.D. SLOw AND FRAgILE RECOvERy IN ThE INDUSTRIAL COUNTRIES I. Global assessment and outlook The global economy has taken off from the worldwide recession and entered a V-shaped economic recovery. It is expected that in the summer of 2010, the worldwide economic expansion will become very slow and fragile. Massive expansionary fiscal policies—mainly spending stimuli, tax cuts, and direct cash payments—combined with low interest rates have succeeded to end a steep slide in demand. However, large deficits and excessive quantitative easing have not yet generated a self-sustaining recovery as consumers around the globe consolidate their balance sheets from falling asset prices as evidenced by slowly improving consumer confidence. Following six consecutive quarters of negative or nil economic growth, preliminary data on the third quarter of 2009 shows that the combined output of the member countries of the Organization for Economic Cooperation and Development (OECD)—the 30 richest economies in the world—increased by an annual growth rate of 3.2 percent from the previous quarter. In the third quarter of 2009, real output ...