World Economic reports

Posted by Contributor on September 9, 2010 at 10:39 am in Business, Other Business Stories, Other Top Stories

USA

The US economy grew at an annualised 1.6% in the second quarter, revised down from a first estimate of 2.4%.

The figures were better than most analysts had expected.

Recent data on the US economy had raised worries that the US was entering a double-dip recession, dragging the rest of the world with it.

The revised figure was mostly due to the largest surge in imports in 26 years, and a slower build-up of stocks by companies.

Unlike most other countries, the US always gives its quarterly growth figure as an annualised rate, which is a rate of economic growth for the three months that assumes the same level for a full 12 months.

Economists had estimated the revision would be sharper for the April-to-June period, down to about 1.3%.

Nevertheless, it still marks a big drop on the growth figure for the previous three months, which stood at 3.7%.

The US economy has now grown for four straight quarters, although that annualised growth rate averaged only 2.9%.

Experts say that the economy needs to grow at about 3% just to keep the unemployment rate, currently 9.5%, from rising.

Eurozone

The eurozone economy grew by 1% between April and June, official figures have confirmed.

The initial estimate was published last month, showing stronger growth than expected, largely due to strong exports that were boosted by a weaker euro.

The German economy, which grew by 2.2% over the three months, helped to drive the zone’s overall growth.

The figures confirmed the eurozone is growing faster than the US economy, which grew by 0.4% during the quarter.

Exports grew by 4.4%, exactly the same amount in percentage terms as the increase in imports, the zone’s official statistics agency, Eurostat, said.

Growth in the eurozone was also boosted by a rise in household spending, which was 0.5% higher than in the previous quarter.

Eurostat also confirmed that growth in the UK between April and June was 1.2%, while growth was 0.6% in France, 0.4% in Italy and 0.2% in Spain.

The Greek economy shrank by 1.5% and was the only economy in the eurozone to contract during the period.

“It’s an externally led recovery – if you look at export growth it’s very, very strong,” said Stefan Schneider at Deutsche Bank.

However, he questioned the strength of household spending, despite the modest rise in the last quarter.

“If you look at private consumption, this is still very modest given the labour market situation in various European countries, which is not very positive for consumption.”

Figures also released on Thursday showed a rise of 61,000 in unemployment benefit claims in Spain in August, as short-term summer contracts began to expire.

This followed four months of falling claims, but was entirely expected as the summer tourism season comes to an end.

The Spanish unemployment rate remains at about 20%.

Figures released earlier this week showed unemployment in the wider eurozone remaining stubbornly high at a record rate of 10%.

This is slightly higher than the 9.5% unemployment rate in the US.

High unemployment is undermining the global economic recovery, analysts say.

India

India’s economy grew at its fastest rate for more than two years in the last quarter, according to official data.

In the three months to June, GDP was up 8.8% compared with the same period last year.

Although only the 11th biggest economy in the world, India is the second fastest-growing, behind China.

Strong industrial and mining output helped boost the growth rate, India’s statistics agency said.

Industrial output rose more than 12%, while mining and quarrying jumped nearly 9%.

Services including hotels and banking also did well, with output up nearly 10%.

Services account for 55% of India’s economy, while industry makes up around 25% of output.

In July, the Reserve Bank of India said it expected annual growth for the current financial year to come in at about 8.5%.

Australia

The Australian economy grew at its fastest pace in three years in the second quarter of the year.

The growth was fuelled by demand for the country’s iron ore and other commodities, mainly from China.

The figures released showed gross domestic product (GDP) expanded 1.2% in the April-June quarter from the previous quarter, compared with 0.7% in the first quarter.

Australia has gone for 19 years without suffering a recession.

It was hit by the recent global downturn, but less hard than most other developed countries.

Australia came through the crisis better than most other developed countries, although it still needed a stimulus package of 42bn Australian dollars ($38bn; £24.6bn).

Economists hailed the GDP figure.

“It’s a fantastic result – the economy is as strong as an ox,” said Brian Redican, a senior economist at Macquarie. “It was also well balanced, with household consumption much stronger than anyone thought.”

He added that the figure meant there was now very little chance of a cut in interest rates.

Investors had thought there might be cut in interest rates at some point in the near future, as inflation had been cooling.

Rates have been on hold at 4.5% since May.

Canada

Canada’s economic growth slowed sharply in the second quarter of the year, figures from the Canadian statistics agency have revealed.

GDP increased by 0.5% in the three months to June, down from the 1.4% growth seen in the first quarter.

That means the economy grew at an annualised rate of 2% in the last quarter – down from 5.8% in the first quarter.

Sluggish consumer spending was blamed for the slowdown.

Total spending grew by just 0.7% in the three months to June, down from 1% growth in the first quarter.

Spending on cars fell, as did household spending on electricity and gas.

Spending on furniture and other household goods rose, but only by 0.1%.

The growth figures disappointed many analysts who had expected an annualised growth rate of closer to 2.5% for the April-to-June period.

Credit: BBC