Is global recession coming to an end???

The global slump has reached its low point in the business cycle. Asia’s economies are looking rosier and brighter, buoyed by a spectacular rebound in China, where output grew at an annualised rate of some 16% between April and June. This is obvious good but the picture is still not clear. The boost from restocking will be temporary. And a big source of demand—government stimulus—is unsustainable. Across the globe governments have, rightly, stepped in to counter the economic slump. In America an increase of 12 percentage points in the budget deficit has cushioned the slump in private spending. Around 75% of China’s growth this year will be state-directed, either through public spending or officially induced lending. Governments can prop up economies temporarily, but rising budget deficits are not a route to sustainable growth. Eventually burgeoning debt will limit the room for fiscal manoeuvre. A solid global recovery demands healthy and balanced growth in private demand. Unfortunately, that still seems far off.

Global Economic Storm to Massive Public Debt

The worst global economic storm since the 1930s may be beginning to clear, but another cloud already looms on the financial horizon: massive public debt. An interesting article published in 'Economist.com'. Find the synopsis of the article.

Across the rich world governments are borrowing vast amounts as the recession reduces tax revenue and spending mounts—on bail-outs, unemployment benefits and stimulus plans. New figures from economists at the IMF suggest that the public debt of the ten leading rich countries will rise from 78% of GDP in 2007 to 114% by 2014. These governments will then owe around $50,000 for every one of their citizens.