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It seems that the global economy is at a crossroads. Some experts say it will decline, others say it’s going to improve.
Companies had ridden a worldwide recovery to boost sales and profits, supporting equity price increases, Noriel Roubini, co-founder and chairman of Roubini Global Economics, told a conference in Budapest. Now, signs of a global economic slowdown may drag down stock prices, he said.
“Until two weeks ago I’d say markets were shrugging off all these concerns, saying they don’t matter because they were believing the global economic recovery was on track,” Roubini said.
“But I think right now we’re on the tipping point of a market correction. Data from the U.S., from Europe, from Japan, from China are suggesting an economic slowdown.”
However, on Friday, stocks rose, preventing the fourth straight weekly loss for the MSCI All-Country World Index, and commodities gained after the Group of Eight leaders said the global economy is strengthening. The US dollar fell.
The strengthening world economy will pave the way for reductions in debt, G-8 leaders said. Europe vowed to fight its fiscal woes with “determination,” while President Barack Obama promised a “clear and credible” U.S. deficit-reduction strategy. Equities gained even after consumer spending in the U.S. climbed less than forecast and sales of previously owned American home plunged 12 times more than projected.
“The world is healing economically,” said Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which oversees $358.2 billion. “I’m delighted to see the G-8 take a longer-term view of things, especially because some investors have been focused on the near term.”
The crux of the matter will boil down to how well world leaders in the Group of Eight make good on their commitments at formal economic meetings. Sometimes they follow through and sometimes they don’t.
A decline in the global economy will impact Asian economies that are dependent on export growth and the fallback will be to maintain or increase the amount of domestic consumption. However, rising oil prices means consumers have less to spend on other needs and wants.
An interesting few months are ahead for the global economy.
Top News from Southeast Asia
May 29 , 2011
These were the most significant stories published by Asean Affairs during the week of May 21-May 27.
Philippines posts record fiscal surplus The Philippines posted a record budget surplus last month, the highest in more than two decades, after it failed to meet its expenditure program for the period. Data from the Bureau of the Treasury showed Monday the national government posted a P26.26 billion (US$605 million) surplus in April, a record high for the last 25 years or more. READ MORE:http://www.aseanaffairs.com/philippines_news/economy/philippines_posts_record_fiscal_surplus