mises
Joined: 05 Nov 2007
Location: retired
|
 Posted: Wed Jun 25, 2008 9:00 am Post subject: A Dozen Significant Economies are at Risk of a Hard Landing |
 |
|
http://www.rgemonitor.com
| Quote: |
Which countries around the world are at risk of a hard landing, i.e. a sharp growth slowdown and an outright recession? Following the U.S. the list is now growing. Countries now at risk of a hard landing now include: the U.S., the U.K., Spain, Ireland, Italy, Portugal, Japan, Canada, New Zealand, Latvia, Estonia and a few other central-south European countries.
The United States is already in a recession; while headline GDP figures still show positive growth in Q1 many other indicators show that the US economy entered a recession in Q1: monthly GDP (as measured by MacroAdvisers) is down since February through April (so far available data); employment has been falling for five months in a row; most components of aggregate demand (durable and non durable consumption, residential investment, capex spending by the corporate sector) are already in negative growth territory; industrial production and manufacturing production are falling.
A hard landing recession is now highly likely in the UK, Spain and Ireland where housing bubbles even larger than the one in the U.S. are now going bust. In these three economies the credit bubble was not limited to housing; you also had � like in the U.S. � a surge in unsecured consumer debt (credit cards, etc.) that became excessive.
In the rest of the Eurozone Italy and Portugal also look close to a recession. There the deflation of smaller housing bubbles is one factor. More importantly the strong Euro is really hurting the competitiveness of all of the Club Med Eurozone members (Italy, Portugal, Spain and Greece).
So, in summary in the European/Eurozone area UK, Spain, Ireland, Italy and Portugal are headed to a hard landing recession while growth is slowing down dramatically in the rest of the Eurozone.
Another major economy at risk of a recession is Japan. In the last couple of years Japan was growing at an anemic but ok rate for two main reasons: a weak yen and the strong growth of exports to the U.S. driven by strong U.S. growth.
Canada may also be headed towards a recession. Its GDP actually fell by 0.3% y/y in Q1 because of falling inventory and residential investment. 75% of Canada�s exports go to the U.S; thus a U.S. recession has significant effects on Canada, even if rising commodity prices have benefited the commodity exporting provinces of the country.
New Zealand is now most likely in the middle of a mild recession. Consumption is declining as urban households are hit by a bursting housing bubble, high debt servicing burdens, high interest rates, and high fuel and food prices.
Finally, even some emerging market economies are at risk of financial stress and hard landing, especially the Baltic states and some central-south European economies.
In Central-South Europe Bulgaria, Romania and Hungary have twin fiscal and current account deficits, balance sheet vulnerabilities (currency and maturity mismatches), overvalued currencies (especially Bulgaria and Romania).
|
I'm quite surprised that he left out India (11% inflation), Korea, Singapore and China (where equity and property markets are crashing). The global recession will be nasty. Venezuela, Iran and Russia all have double digit inflation (20%+). |
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
