Global economy moving from recession into recovery

Buoyed by resurgent Asian economies — notably China and India — the world is now emerging from the 2008-09 recession, according to the Conference Board’s World Outlook-Autumn 2009.

 “The outright decline in economic growth this year is unlike anything experienced in the 1980s and 1990s recessions,” said principal research associate Kip Beckman. “During those recessions, some developed countries continued to have economic growth. In the current downturn, almost all developed countries had at least two quarters of declining economic output, primarily because the credit crunch spread like wildfire through global financial markets.”

The global economy is forecast to decline by 2.3 percent in 2009 and expand by 2.6 percent in 2010. The Canadian and U.S. economies are both expected to grow in the second half of 2009, leading to real gross domestic product (GDP) growth of 2.9 and 2.3 percent, respectively, in 2010. However, the rebound in 2010 is anticipated to be about half of that expected in a normal recovery.

In Europe, France and Germany posted surprising increases in real GDP in the second quarter, but the region will lag the rest of the world in its recovery. Ireland and Spain are still feeling the after-effects of the housing bust, while Italy’s economy has been hard hit by declining exports. The dire financial situation in Eastern Europe is expected to weaken demand for exports from euro-zone countries.

The Chinese economy is again expanding at a near double-digit pace following a brief slump earlier in the year. The other regional economic powerhouse, India, is also poised to post strong growth over the near term. And Australia is one of the few developed countries that avoided a recession altogether. In all, the Asia-Pacific region should post overall growth of 0.6 percent this year, followed by growth of 5.0 percent in 2010.

Although real GDP in Latin America is expected to fall by 2.4 percent this year, the region is emerging from the recession in fairly good shape. The region’s more heavily-regulated banks are in better shape than banks in the US and Europe. Latin America — notably Brazil, the region’s largest economy — has also increased links with the expanding Asian economies.