Recovery In The Global Economy

The three major developed countries, the United States, Europe and Japan still trapped inside the forest. Signals are positive in the medium term, but there are many negative indicators that make us cautious at the moment. After the Great Depression that began in 2008, and signs of recovery that followed it, we have seen that, for various reasons, the speed of this recovery is decreasing.

The latest data indicate that both the U.S. and the European Union may be growing at a rate lower than initially expected. To this we must add the negative impact on Japan of the economic impact of the earthquake and what it will mean slower growth in the short term for the country. The data of unemployment have been American and some European countries also indicate that these economies are not generating new jobs, which consequently affect consumption in the coming months. Finally, note the negative effect that has been the rise of oil and energy products that reduce the disposable income of consumers over time.

However, not all negative news. Developing countries continue to grow at high rates, and risk in them is of an inflationary spiral that can truncate the process is sustainable. That is why we are living increases in interest rates in most European peripherals and major emerging economies, including China and India.

In the first week of May have seen a significant cut in the price of raw materials by expectations of an economic slowdown. Is a positive, as able to keep inflation under control throughout the year and interest rates remain low in the West, helping economic recovery. This does not mean we have finished the macro-cycle of rising commodity that we must follow a few years supported by the substantial growth of the BRICSs (apparently South Africa was added to the group) and new players such as Indonesia, Turkey, Colombia and Peru.

After all this, where are we now? The short answer is very difficult to give and the main factors to consider are the following: first, there is still a lot of liquidity in the system, supported by one hand, injections of money in Japan and on the other, reinvestment of bonds held by the U.S. Federal Reserve, according expires at the end of June its plan called QE2. Second, global economic growth will be slower but we will not enter a new period of recession. The risk of relapse is practically non-existent crisis. Third, although there are high chances of price increases over time, the inflationary process we see it postponed a few months in developed countries. However, not so much in Asia and Latin America, other regions may see price hikes that jeopardize economic stability. Fourth, the status of the peripheral countries of Europe remains very worrying. The situation of restructuring payments of Greece is no longer a question but a question of time. What may come after it, no one knows, and which was not included in the initial program of the Union.

Finally, the geopolitical risk remains very high throughout the world. The existing arsenal in the Middle East do not know what are the dimensions and, above all, if you can disable either positive or if it will explode. The consequences of how to handle the situation in the region are unpredictable, as if they affect Saudi Arabia and Iran, we could see oil prices at $ 200 a barrel, and thus slow global economic recovery.

In financial markets expect increased volatility in the coming months, though, because of the slight economic slowdown in developed countries, the risk of being in debt is somehow controlled, but within relatively short durations. And considering that the business situation is much better than countries will remain significant opportunities in stock markets in the long term, as long as they buy in times of shock, and in the right proportions to each person .