What are the Global Imbalances? US ran a large and persistent current account deficit (imports higher than exports) of up to 6.5% of GDP in 2006 Diagram of Current Account Surplus / Deficit in US and rest of world source: (1) 2. China ran a large current account surplus, accumulated foreign reserves, kept Yuan undervalued …
An Overview of the Indian economy in 2012 and its prospects for the future. (Depressed by events in Europe, a look at an economy with a very different economic outlook). Summary In the past few years, the Indian economy has been growing rapidly – (e.g. 8.5%2010-11). However, this growth has led to an increase in …
Japan has traditionally had a high savings ratio, but, in past decade the savings ratio has fallen to be close to European / US levels. Graph showing Japan Savings Rates Japan’s economy chasing illusions Since 1998, though Japanese saving rates have declined. The graph is a bit hard to read, but, since 2004, Japanese saving …
In 2011, Greek Manufacturing output fell 15.5% Unemployment currently stands at 20.9% Greek youth unemployment stands at 48% – surpassing even Spain’s youth unemployment Government debt burden stands at 160% of GDP. Despite all the austerity measures, the Greek budget deficit has not fallen because the economy is shrinking so quickly. On top of this …
Readers Question: What would happen if the Euro collapses? The most likely scenario is that countries will leave one by one. A country would default on its debt and decide best option is to leave and create a new currency. The first country to leave would be Greece. Greece would be damaging, but if Greece …
Debt forgiveness is a programme to cancel or reduce the amount of debt a person, or usually country, has. Debt forgiveness is an emotive issue because many feel it is wrong that low income developing countries suffer from high debt burdens when they really need the money to invest in improving economic welfare. Many developing …
Since 2007, the UK has experienced a variety of economic shocks which have caused a prolonged period of economic stagnation, high unemployment and uncertainty. In 2011, the economic recovery proved much weaker than expected, yet inflation was stubbornly high. In 2012, fundamental weaknesses are likely to keep the UK economy depressed with high unemployment and …
Readers Question Can a fiscal stimulus package reduce the extent of the recession? Fiscal stimulus involves a combination of lower tax cuts and higher spending. In theory the tax cuts will increase disposable income and therefore encourage consumer spending, leading to higher aggregate demand and economic growth. Fiscal stimulus is typically financed by higher government …