In 2010, the global economy recovered from the deepest recession since WWII faster and more dynamically than expected. The first six months in particular saw a rapid upswing, which weakened somewhat in the second half. Despite this clear recovery, the risks of a setback remained – due to sovereign-debt crises in parts of the EU (including Greece, Ireland and Portugal), growth problems in the USA, and potential overheating in some emerging economies. China’s inflation rate, for example, has risen sharply over the past few months. The International Monetary Fund (IMF) estimates global economic growth at 4.8 percent in 2010
(2009: -0.6 percent).
US Economic Growth below Expectations
According to the IMF, GDP in the USA rose by 2.6 percent in 2010 (2009:
-2.6 percent). The US economic rebound was not as strong as anticipated. As a result, the US Federal Reserve provided an additional $600 billion in October 2010 to keep interest rates low and to stimulate capital spending and private consumption. High unemployment and the trade deficit have been a significant drag on the US economy.
Sources – worldwide: IMF; USA: IMF; Asia: ADB; India: ADB; Japan: IMF;
Europe: IMF; Germany: Federal Statistics Office
(as of December 2010)
Asia Drives Global Economic Growth
In 2010, Asia’s importance increased as a key growth engine of the world economy. Robust performance in this region contributed significantly to the global recovery’s strength. The Asian Development Bank (ADB) expects economic expansion of 8.2 percent (2009: 5.4 percent), with China and India showing particularly dynamic growth. According to ADB forecasts, China’s economy grew by 9.6 percent (2009: 9.1 percent). To reduce the risk of economic overheating, the People’s Bank of China raised its base rate by 0.25 percent in late December 2010. In India, GDP increased by 8.5 percent (2009: 7.4 percent) according to the ADB. Japan experienced growth, as well. According to the IMF, Japan’s GDP rose by 2.8 percent, following a sharp decline in 2009 due to an export slump (2009: -5.2 percent).
Moderate Eurozone Growth
IMF data show that eurozone countries grew at a moderate pace. GDP climbed 1.7 percent (2009: -4.1 percent). The eurozone thus lagged behind the global recovery. In countries such as Greece, Ireland, Portugal and Spain, high sovereign debt and local banking crises held back economic development.
Germany Profits from Higher Exports
The German economy weathered the crisis much better than most other European countries. Germany thus regained its leading role as an industrial nation with a strong production base. Data issued by the German Federal Statistics Office show that GDP increased by 3.6 percent (2009: -4.7 percent). Growth was primarily supported by exports, though stronger domestic demand was a factor, too. The upturn benefited the labor market. For a while, the number of unemployed once again fell below the three-million mark.