Hello koala king and folks.
Good day to you.
Find below my take on the world economy in 2010.
In 2010, a large part of the global economy is still dealing with the consequences of the 2008-2009 financial crisis. While a large number of economists made a relatively simple and quick assessment that the crisis is over in many developed countries of world, complications still surprises the market.
Changing power relations
Emerging powers (China, India, Brazil, etc.) that suffered minimum damage from the financial crisis continued their ascension to the international scene in 2010.
China in the past year in terms of GDP, surpassed Japan and later the United States. It became the world’s second largest economy. These developments along with the role of China as a world power in the volume of export of goods and it’s huge foreign exchange assets, gave it an increased scope of influence in the field of trade, financial and industrial.
However major weaknesses in China should not be ignored. Especially the country’s comprehensive use of economic leverage that the international community are ever more intolerant about : Industrial property rights, low levels of social rights, dumping money (keeping the yuan rate artificially cheap), environmental pollution.
Having said so with the increasing purchasing power of the middle class of the world’s most populous country, China will be a growing market for many countries.
Other emerging powers and dynamic developing countries (Thailand, Turkey, Malaysia, Mexico, Indonesia, etc…) in 2010 enjoyed a high growth rate due to their minimized exposure to the financial crisis.
Unlike some skepticism regarding the economic conditions of the “third world”, 2010 probably brought international limelight to the developing world due to the relatively great economic performance. This suggests that for the past thirty years and especially in the first ten years of twenty first century, the role of developing countries are probably given less than appropriate recognition.
From USA to Europe
In the United States, a return to boom in 2010 was not as intense as what was predicted. Difficulties arising due to the financial crisis continued to plague the US economy and apprehension remained.
However as a total record, the US economy in 2010 is not that bad. Growth rates in the world’s biggest economic power is probably about 3% and is along the growth rates of Germany. The United States in terms of these statistics is among the most successful advanced countries in the world.
In 2010, investment in the US is increasing and wages somewhat increased, together with household savings. During the last two months of 2010. America published a series of good economic news bringing hope that “Uncle Sam” is back to it’s former glory and that the memories of the 2008-2009 Financial Crisis will come to a close.
Having said so there remains the big problem of the U.S. economy, unemployment. It remains at around ten percentage and is taking a long time to recover. Eight million jobs were lost during the crisis in the US and this probably cannot easily be compensated.
The European Union and the European area in 2010 faced much difficulties.
The twenty-seven EU member states in Europe and sixteen Euro Zone countries are not facing the same economic situation and this complicates matters. A group composed of Germany, Austria, the Scandinavian bloc, Netherlands and Luxembourg leads 2010 with more or less satisfactory performance.
On the other hand, another group such as Greece, Ireland, Portugal and Hungary, struggles with debt and financial difficulties. It is only with the help of its regional allies and the International Monetary Fund that the risk of bankruptcies remained controlled.
In between these two groups are countries such as Italy and Spain which currently are economically in an intermediate state. Having said so even the financial situation of a country like France is not immune to doubt.
In the last months of 2010, the Euro as a common currency of sixteen member states of Europe (the first of January with Estonia’s participation, there will be seventeen countries) was put to a severe test and in a number of regional member countries including Germany, citizens increasingly become doubtful of the single currency.
In 2011 for the Europe Union and the Euro area, the alarm will sound. The union members have two options ahead: advancing quickly and decisively towards greater integration and acceptance of common economic policies or continue the current situation with the risk of a collapse.
Unity of Europe, one of the most glorious achievements of human civilization is faced with the ultimate challenge
Happy New Year. 🙂
Masoud is a businessman and a Senior Forex Koala. Connect with him at our page on Facebook.
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