The economic trends from the world over indicate that the global economy is still in a precarious state and far from healthy and dependent on continued support from central banks, in spite of what experts have pronounced to be signs of stabilization.
Economic Trends Worse in Developed Nations, says TIGER
The vital signs are off for the Group of 20 leading economies, with the advanced (read developed) nations in a more alarming state than the developing ones. These findings have been revealed by statistics revealed by TIGER (Tracking Indices for the Global Economic Recover) index.
These conclusions are a validation of the statement made recently by Christian Lagarde, MD of IMF, that regardless of the slight improvements, the risks remain high.
Economic Trends: The Bridge Between Real Economy and Financial Markets
The financial markets are faring somewhat better than what these inferences suggest, due in large part to the massive cash injection by the European Central Bank. Almost everywhere except the USA, however, the outlook on the job market and subsequent growth, however are bleaker than the encouraging economic trends from the stock markets suggest. As one expert puts it, the machinery put in place for the economic recovery is running low on fuel due to a variety of factors, ranging from a paucity in steady demand to the inability of political tools already straining at the seams to get things going, but not quite able to. Add political instability and weak financial institutions to the mix and you have a rogues’ gallery worth of suspects as to why the economy is unable to recover.
The TIGER index looks at a wide variety of factors to analyze and draw conclusions from. The methodology is to take a compound view of real economic activity, financial variables and consumer confidence with respect to their upward or downward movements in tandem. Making use of advanced statistical analytical tools, the correlation among movements in economic trends can be detected and deciphered.
The goods production aspect of the economy in Europe is reeling from the rather severe austerity plans implemented in many countries, further stifling demand even before the ill-effects of the 2011 debacle could wear off. The result is that growth is being curbed, the immediate impact being deteriorating debt-to-GDP rations, resulting in untenable political conditions prevailing on a pan-European level. This would further worsen the very same factors that are already taking a toll on the economy, thus completing a vicious cycle of negative economic trends being worsened by political uncertainty.
The slowdown has seeped into the developing markets as well, with the growth outlook having started to worsen already as industrial productivity has been shown to fall short of expectations in all BRIC nations. Having long defied the disasters that have been plaguing the developed world on and off since the sub-prime crisis, the onus of supporting world growth without support from the once mightly economies has evidently taken a toll on the emerging economies.
The Silver Lining
Recovery of economic trends in the US are by far the more encouraging as compared to Europe, with modest but steady growth being reflected, even as the tendency of susceptibility to shocks remains to go completely.
It is a matter of relief, however, that in 2012, the TIGER index has registered improvements across all the parameters that it uses as confidence indicators. The scenario is not as bleak as it looked in the winter, at least for the European economy.
The worse might seem to be over, but the rise in confidence has to be reflected in terms of improved demand for goods and enhanced production for the real economic indicators to kick off. Keep reading for more on the latest global economic trends and web economy news.