World Crisis Online

AFP

MOSCOW — Russia’s economy grew 4.0 percent in the first half of the year, continuing its recovery from the global crisis, but this was slightly below official forecasts, data showed on Tuesday.

The figures from the state statistics office were below mid-July estimates for growth of 4.2 percent in the first half, according to the economic development ministry.

The data showed industrial output up 9.6 percent in the January-July period compared with a year earlier as the country recovered from a severe slowdown sparked by the global economic crisis.

This year, the economy has been hit by the worst drought in decades, with many industrial companies shutting shop or cutting shifts as wildfires raged in western Russia, engulfing Moscow in a hazardous smog.

Economic Development Deputy Minister Andrei Klepach said earlier this month that the drought would cut at least 0.7-0.8 percentage points from 2010 growth as Russian harvests were hurt by the extreme temperatures.

The drought has destroyed one quarter of Russia’s crops, leading the government to slap a blanket ban on grain exports. Last year, Russia’s hydrocarbon-dependent economy was hard hit by the economic crisis, suffering a 7.9-percent economic contraction after growth of 5.6 percent in 2008.

But with the recovery of energy prices and a strong performance in the second quarter, the government forecast growth of 4.0 percent for all of 2010. Earlier this month, the International Monetary Fund put this year’s growth at 4.25 percent and 2011 at 4.0 percent.

Introduction To World Economy

After the recession of 2008, the world economy is seen on a revival path since the second quarter of 2009. It is seen as an outcome of revised policies introduced in after the recession stepped in. Yet, the recovery is not uniform across the globe and is not robust enough to provide positive stimulus.

International Finance and Investment, Unemployment and Other factors influence on World Economy

The recession of 2008-09 was created by financial institutions and they were the worst hit. However, the cascading impact can be seen in all the economies. The foreign direct investments have gone down drastically because of funds crunch. Lack of foreign investments has dried the resource pool and many projects had to be scrapped. It had direct impact on trade and productivity declined in the absence of financial resources and led to massive lay offs adding to the unemployment rate.  The number of unemployment has doubled in United States since 2007. However, the job losses are mostly in the manufacturing and export oriented sector. Labour markets are expected to remain weak in 2010. (more…)

TOKYO — Japan’s newly installed prime minister startled the nation on Friday by warning that it could face a financial crisis of Greek proportions if it does not tackle its colossal debt.

The stark words from the prime minister, Naoto Kan, followed by just hours the resignation of his banking minister and ally in the governing Democratic Party, Shizuka Kamei — an advocate of big spending. Mr. Kamei’s departure seemed to signal that the new government would focus on reducing Japan’s heavy government debt, called sovereign debt, by far the highest in the industrialized world, and cutting back on the wasteful public works projects.

“It is difficult to sustain a policy that relies too heavily on issuing debt,” Mr. Kan told the Japanese Parliament in his first policy speech. “As we have seen with the financial confusion in the European Community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone.”

Worried by the Greek debt crisis, policy makers around the world have increasingly raised the alarm over runaway government spending of the past two years, as the world has grappled with an economic crisis.

Indian Government Officials said that “we are keeping a close watch on the European debt crisis, though it has not seen any significant adverse impact on its economy”.

Indian Union Commerce Minister Anand Sharma said “We are keeping a very close watch on the situation (the European crisis). So far, there is no adverse impact of significant nature,”

Indian Union Commerce Minister Anand Sharma told reporters on the sidelines of a conference organised by the Tea Research Association of India.”I don’t foresee in the immediate context any major impact which would create an alarming situation here,” (more…)