Skip to main content

Year Ended 2010 –- World Economy this year .

There are many important events to remember in 2010, first that is European debt crisis, deteriorating economic condition of the U.S. and advance footsteps of Emerging countries. Let first see the result of different countries in year 2010 –

GDP of some Developed countries like Japan  and  U.S.  decreased in Q-2. Where their European counterparts have increased GDP growth rate  in that time frame. Where  the picture is opposite in Q-3, may be due 2nd round of economic problem that Europe is facing this year.
Now let see the GDP growth rate of some Emerging nations.

China & India is far ahead among the Emerging nations. Indonesia and India’s  growth rate is in increasing mood. While Brazil and Russia’s  GDP growth rate is decreasing. BRIC countries are inviting South Africa to join them, now I think it is a long due,  this will increase their total contribution and that may challenge other groups. According to  Brazilian Govt’s  statistics bureau, Brazil is reducing it’s  unemployment level in lowest level as recorded ever, for this many sectors are not finding enough workers, there is a shortage of workers and some  are delaying  appointment. Now this is a true test of development.
Now let compare charts of different countries.

GDP growth rate  of Emerging nations are far ahead than Developed nations.  Though Brazil is little bit disappointing comparing to their stock market boom, but country like  Brazil and Indonesia don’t have big  GDP figures in past too. But comparing to 2007-08 figures Russia is lagging in 2009-2010. Where as India and China is far ahead among all other countries.
Now let look at the 10 year Govt. Bond yields of different countries.

Deteriorating economic conditions of Euro countries are showing in their increasing Bond yield value. If in Europe we consider German 10 year Bond yield as benchmark then we can see the difference with these countries. Where some of the Emerging countries like India and Brazil have traditionally high bond yields, so that is not a concern.

Despite so many developments Emerging economies cannot left their true character of high interest rate, which in many cases hampering the growth.

Outlook for  2011
I cannot see much of a growth story in 2011. Some experts  expect economic expansion of 3.1 per cent in 2011. Growth rate of Euro areas are better in 2010 than 2009. GDP Growth in the Euro area is forecasted to 1.3% - 1.8% per cent in 2011. United States growth is expected to be 2.2%-3.1%  in 2011. For Germany it is 1.7% and U.K. around 2.5%. In  Japan  growth is expected to be around 2%. Growth for Emerging nations is expected to be around 6.4%, especially some of  Emerging Asian countries are expected to show more discipline. Growth of China is expected around  9.9%, for India  8.4% where their counterparts  Brazil 4.1%, Mexico 4.5% and Russia around 3.3% for the year 2011.
Advance countries are going to face fiscal problem in 2011, where private demands are not increasing much in 2010 though some data are yet to come but this may be the first impression about them. In spite of low interest rate economic activities are not encouraging much. People are not spending much. Now it is time to look how those new economic stimulus works. On the other hand banks are still closing their business, in 2010 more than 150  banks failed  in U.S. It will be very interesting to see what happens in 2011.
On the other hand Emerging nations  will face the problem related to much capital inflow, currency appreciation and  as a result asset bubble  and inflation and related interest rate hike  e.t.c.  Some countries dependency on domestic demand will increase and some may concentrate from export to domestic demand.
Inflation and export markets are two big matters those are  going to decide the future. Inflow of moneys seeking for a higher return than treasury will create more problems. It will be very interesting to see if Chinese economy crosses Japan  for the 2nd spot. 
In 2011 we are going to see world’s biggies are concentrating hard on African countries may be due to natural resources, like many countries are looking  on Afghanistan.  Countries with  natural resource are  going to get lot of importance in future. We also can see  use of weapons called Sovereign debt default  and use of Rating down grade  when and where it is  needed. I hate this rating agencies, some time I think UNO  should set up a  Rating Agency, whose sole purpose will be related to rating of different countries and their Govt.  Bonds. Frankly it will be not  good choice to leave this job to a private one , perhaps we know why ?

It is hard to say whether BRICSA countries are going to contribute more  in world economy or whether they are going to challenge the G-7 countries, or  there will not be any G-7.  But  it is sure balance is shifting and it is shifting very fast. MAY BE IT IS THE NEED OF THE TIME.

NOTE :  Please see the disclaimer of this blog .


Popular posts from this blog

DAX forecast for coming week ended 15th March, 2013.

This week was very good for Dax, though it is getting resistance at 8100 range. Now it has a chance to test downside again. I think even if Dax tests lower levels, it has more chance to bounce back from around 7800 range and therefore it will again test upside.

On the other hand if it shows flat movements around 8000 range in initial days of the coming week then there is a chance that it may take a decisive call in later days. Considering the recent trends it has the chance to test higher levels may be around 8200 but that will be a very aggressive call after taking in to account the movement from last December. I will worry about the downside when Dax will be testing levels below 7600 ranges.
NOTE: Please see the disclaimer of this blog.

Fed’s rate hike Vs Sovereign rating up gradation

Financial market is very much worried about the rate hike in US, probably this is going to come in coming December. But I think that is not going to change much of the things. Even Fed hikes rate in December it will be not so much, because we are forgetting one thing that interest rate in US is around zero so even they hike rate by 0.25-50% basis points (at most) in this year that will not be enough cause for Dollars to change their locations around the world especially markets have already discounted this coming rate hike in US.

A new disaster is coming in EU banking sector, whom to blame, big Audit firms!

First I was thinking what should be the title of this posting? Will it be good if I write that big audit firms set the time for EU bank collapse! If someone is thinking that financial crisis is over then think twice because the coming EU banking crisis is no way less than 2008 financial crisis. The time bomb will explode at some point of time in future, the time has not yet set for it. In that tsunami, forget about the smaller if any major banks collapse then I will not be surprise.