Original article, y Patrick O'Connor, via World Socialist Web Site.
The United Nations’ Department of Economic and Social Affairs (DESA) updated its "World Economic Situation and Prospects" report last Thursday, forecasting world growth this year of negative 2.6 percent. World trade is expected to decline by 11.1 percent—the sharpest annual contraction since the 1930s. The latest estimates are revised sharply downward from previous UN forecasts in January of positive 1 percent growth for 2009, with even the most pessimistic scenario then anticipating negative 0.5 percent growth.
Hmmm. If I didn't know better, listening to the MSM and to the cheerleaders, I would have sworn that we had hit bottom and were coming out of the depression/deep recession. Well, perhaps not.
The revised figures are another indication of the unprecedented rapidity with which the slowdown in global economic activity has developed. Putting paid to recent optimistic US media reports of a potential imminent recovery, DESA’s director of the development policy and analysis division Rob Vos said there were "no green shoots to be seen which could signal beginnings of a new spring in this still very wintry landscape".
Mind you, economics is, to a good extent, driven by emotion. If people feel good about their positions, then they're likely to spend more. So, I suppose one can't really blame the cheerleaders for...well, cheerleading.
The report predicts a contraction of 3.9 percent for the advanced economies in 2009. The US economy is forecast to shrink by 3.5 percent. "With unemployment rising sharply and financial de-leveraging continuing, the risk of the economy falling into a protracted deflation is still increasing," the UN warns.
Take your choice of elixirs, ladies and gents. On one side is deflation, in the middle is hope and on the other side is hyperinflation. Ah...I see you like the center. Good choice. What's that? Oh, you like the taste? Sorta like grape kool-aide? Hmmmm....
Data released by the US Commerce Department on Friday added further weight to the UN forecast. First quarter 2009 US gross domestic product (GDP) declined by 5.7 percent, not as severe as the previous quarter’s 6.3 percent contraction, but still worse than most economists’ predictions. The Commerce Department noted that quarterly corporate profits nevertheless increased by an average of 3.4 percent. This was driven by financial sector profits, up an astonishing 94.9 percent due to the Obama administration’s bailout measures; non-financial sector profits fell by 8.6 percent.
Aha! Here we go. The banksters are doing well for the time being. That explains why the bankster frauds running our economy keep talking as if things are rosy for all of us. Well...as the old saying goes: "Give me $12.8 trillion (as of March 31, 2009) and I probably can turn a profit, too."
I'll let you read the rest of the article. O'Connor does a good job at showing why the rest of the world's economy seems not to be doing so well at the moment. While early estimates look much better for next year, the leading engine of such a recovery looks to be Asia, rather than North America or Europe. The improvement is based upon no unforeseen roadblocks (of course, the collapse of the financial sector was 'unseen' while it was building up). He also reminds us of the social misery which accompanies the continuing economic downturn. He finishes with the following:
The UN report also notes that numerous middle- and low-income countries have seen large currency devaluations in recent months, some between 20 and 50 percent. This has "made external debt service obligations much more expensive in terms of local currency and are already affecting the budget positions of governments and businesses". As a result, "many developing countries face difficulties rolling over their foreign debts, with some $3 trillion of emerging economies’ foreign debt maturing during 2009."
This is certain to mean a new round of government cutbacks to spending on essential social services, such as health care and education, as resources are shifted to pay off the international banks.