May 25, 2024

Global growth is accelerating

 

The world economy made a strong start to the new year with the support of positive data from the USA and China. When we look at the components of growth, we see two drivers: the increase in retail sales and the strengthening in investment expenditures.

Despite the financial cliff concerns in the US economy, retail sales figures worldwide grew by over 3% in the fourth quarter of 2012. The revival in retail sales is due to the increase in employment and income, as well as the opening of borrowing channels.

Seeing that the final demand increased steadily in 2012, the business world started to look at the future more optimistically. The increase seen in investment expenditures and orders in recent months shows that the industrialist has decided to put his finger under the responsibility again. On the other hand, the fact that the industrialists melted the stocks instead of increasing production indicates that the fluctuation will continue in the short term.

When we look at it from a regional perspective, a strong wave starting from the Chinese economy and spreading to Asia stands out. The housing sector, which was revived by the monetary expansion made by China by reducing the reserve requirement ratios and interest rates, helped to eliminate the worry of a hard landing in the economy. Growth began to accelerate in developing countries in the region doing business with the USA and China.

The sick man of Asia Domestic demand in Japan’s economy is still very weak. However, in parallel with the recovery of global growth, things started to go well on the export front. More importantly, it is understood that the Central Bank will start to follow a much more expansionary monetary policy after the change in management.

Despite the increase in risk appetite and the improvement in financial markets in Europe, there is no sign of recovery in the real economy. The data released show that the Euro Area shrank by more than 1 percent in the last quarter of the year. It is expected that bleeding will decrease in the European Region in 2013, but the recession will continue.

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