The 2011/09/15 at 15:11
The European Community will abandon neither Greece nor the euro. For the first time, decisions made during the summit gathering Heads of State and Government on 21 July 2011 have offered Greece hope of recovery. These decisions also reinforce the instruments of financial cooperation in the euro zone.
The European economy has nevertheless not pulled itself out of pit. Indexes for the month of July, namely the Purchasing Managers Index (PMI), do not bode well. They suggest that the slowdown currently underway in the euro zone may have greater implications than previously expected. After already recording notable declines in May and June, the PMI, a composite index for business activity, underwent its strongest drop since November 2008 (-2.5 points). At 50.8 points, it is now only marginally above the threshold indicating a stagnation of activity (50).
In this way, according to economists from the Crédit Agricole, the expected slowdown in the second quarter (+0.3 % following + 0.8 % in the first quarter) should continue and even become aggravated in the third quarter. Faced with the problem of public debt, the growth of European countries risks long-term weakening due to recessive pressures stemming from sustained reduction of debt, as was the case for growth in the Japanese economy following its credit crisis at the start of the 1990s, believe certain economists.
According to the French asset manager Carmignac, austerity policies that are either implemented or merely advocated increase the risk of a “Nipponisation” of advanced economies. In the face of a long-term deflationist climate, the return to budgetary virtue is problematic, considers the asset manager. Premature austerity measures are likely to trigger off recessive effects on growth, thus making the resorption of public deficits difficult.
In the United States, prospects are hardly any more optimistic. The consensus is that economic data will improve in coming months, as a consequence of lowering petrol prices and the positive effects of the re-establishment of the Japanese production chain. Yet certain experts consider that this rebound will be short-lived for at least three reasons.
The first is that advanced indicators of US growth have weakened in recent months, thus flagging only a slight and passing inflection in the cycle. The second is that certain variables contributing to current growth are at their maximum contribution level. In this way, it would be difficult for retail sales to continue to grow at a rate of 7.5 % per year. The third reasons concerns the persistence of the deflationist effects of debt reduction in the economy, leading to a reduction in the potential of domestic demand and an extension of the real-estate doldrums.