The 2011/10/10 at 09:25
The horizon is hazy for developed countries. The Organisation for Economic Cooperation and Development (OECD) published last month its composite leading indicators that show a generalised slowdown of the world's major economies. In this way, in July, most of the 34 OECD member countries and major-economy non-members underwent economic slowdown. The composite leading indicator for the OECD zone, as in the case of the G7, recorded a 0.5 point decline, dropping for the fourth consecutive month. The countries where economic activity has slowed the most are Germany, Italy, United Kingdom, Brazil, as well as India and China. The United States and the Russian Federation have also recorded a more visible slowdown than in the previous month.
Several days earlier, the institution had revised downwards its forecasts for developed countries. Falling to 0.4 % in the second quarter of 2011, the growth rate of G7 countries is expected to come to 1.6 % in the third quarter, but will fall to 0.2 % in the last three months of the year. "The recovery almost came to a halt in the second quarter in many OECD economies," states an OECD report. On the one hand, international trade stagnated in the second quarter. On the other hand, the employment market has not recovered while the confidence of businesses and consumers is on the decline, notes the OECD.
Even worse, the sovereign debt crisis in Europe and the United States threatens to further penalise the economy. In these conditions, the institution considers that "the risk of more negative growth going forward has become higher in some major OECD economies" even though" a downturn of the magnitude of 2008-2009 is not foreseen."
This environment therefore justifies the accommodating monetary policies in place. All the same, "if in coming months signs emerge of the weakness enduring or the economy risks relapsing in recession, rates should be lowered where there is scope". This viewpoint is shared by the European Central Bank. After raising its rates in April and July, the ECB is changing tack. On Thursday 8 September, Jean-Claude Trichet mentioned a "downside risk to growth" in the euro zone. Leaving its rates at 1.5 %, the institution has lowered its forecasts for GDP in the euro zone by 0.3 point to 1.6 % for 2011 and by 0.4 point to 1.3 % for 2012.
Inflationist risks are currently "balanced" rather than upward. This assessment points towards a drop in rates by the end of the year. Meanwhile, the United States is backing recovery. The White House will be placing 447 billion dollars (325.59 billion euros) on the table to avoid recession. The Federal Reserve is studying options for new measures to support activity.