WSJ - The world economy shows serious signs of recession

/INTERFAX-AFI, New York, July 15, 08/ - The world economy, which has long remained flexible despite the slowdown in the USA, now sharply recessed, The Wall Street Journal writes. The published data on Thursday the European Union's Statistic Office showed eurozone GDP decline in the second quarter, in the first time since the introduction of euro in 1999. Another adverse signal pressure on the American economy has the data on acceleration of inflation in the USA in July to highest level for 17 years. Growth in consumer prices last month amounted to 5.6 % in annual expression. Thus, there are currently four of five larges world economies - the USA, eurozone, Japan and the Great Britain on the brink of recession. GDP of China, India and other major countries in emerging markets continues to grow rapidly. At that, weak economic growth in the world restrains prices for commodities, including oil, metals and grain, allowing consumers to relax a bit and reduce business costs for raw materials. Since the beginning of this week, the cost of oil fell by 1.1 %, since a record $147.27 on July 11 - by 23 %. World economy recession also leads to a sharp revision of earnings forecasts of many corporations, writes the newspaper. For the USA slowdown in global economy growth is both positive and negative factor. The decline in commodity prices beneficial to consumers and producers and the weakness of the dollar reduces the value of US imports. At the same time, the deterioration situation in world economy had a negative impact on export volumes, remaining once of the few bright spots in the US economy. "Every region of the world, except oil-rich Middle East and North Africa, experienced economy recession this year" - is said in the survey of analysts of Global Insight. Deutsche Bank experts predict that the rate of recovery of world economy in 2008 makes 3.7 %, in 2009 - 3.2 %. These figures are minimal since 2002 - 2003. The deterioration of forecasts for world economy contributes to a number of factors. Thus, some countries, including Spain, Ireland and Britain confronted crisis on the housing market similar to what is happening in the US and the weakening of the banking sector. Stagnation in the American economy continues to adversely affect the other courtiers because the US is the world's largest importer and account for about a quarter of world GDP. Many regions of the world are trying to cope with growing inflation, which is particularly important for countries emerging markets. Central Banks of those countries - from Mexico and Brazil to Romania - continue to raise interest rates in an effort to restrain inflationary pressure. While the recovery rate is a powerful tool in combating rising prices, it also usually leads to a deterioration of indicators of economy recovery, the newspaper writes. "The world economy goes to pieces in the face of rising weakening in the US, Western Europe and Japan - JPMorgan economist David Hensil noted. - This relaxation is beginning to spread on emerging markets also". Japan GDP in the second quarter fell by 2.4 % in annual expression, which is the maximum fall in 7 years. The British economy also may move to first recession in the last 15 years. Retail sales in Britain fell in July by 0.9 %, production in manufacturing industry - by 1.3 %, housing prices for the year decreased by 9 %. [2008-08-18]