The world economy is stuck in a low growth trend, unable to sustain a decent recovery and even threatening to slow sharply, according to data computed by the Financial Times (FT) and the Brookings Institution.
Despite solid financial markets and returning confidence among companies and consumers on emerging markets, overall indicators of economic growth barely changed from the middle of 2011. In the last two years, attempts to revive the economic activity were stopped repeatedly by weak macroeconomic data and the eurozone crisis.
The tracking indexes show that the global economy is not able “to achieve lift-off and facing the risk of stalling. The best that can be said about the weak pace of economic activity is that it has bottomed out in some key economies,” said Eswar Prasad, a researcher at Brookings Institution.
The evidence of maintaining pressures at a global economy level will lead to a more pessimistic mood at next week’s meeting of the IMF and World Bank. Managing director of the IMF, Christine Lagarde, has already warned about the risks of a new “three-speed global economy” where some countries are performing well, some are recovering, while others still have problems.
Indexes used by FT and Brookings Institution combine data on business, financial variables and indicators of confidence in a number of countries.
Comparing with the evolution of the majority of economically developed countries, the U.S. stand out positively, FT notes, but even in the world’s largest economy, the indicators on business and confidence remain at levels much lower than normal.
The slow-down of many emerging economies last year will likely continue in the context of a difficult external environment and limited opportunities to support economic activity, said Prasad. Data for China remain strong and indicate a stabilization of economic advance.
In other emerging economies such as Argentina and Brazil, the signs of slippage toward stagnation persist. At the periphery of the eurozone, indicators of economic activity in Ireland, Portugal, Italy and Spain will remain below historical averages, despite a slight improvement in recent months.
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