UN says world economy could see 'double dip recession'

21/01/2010 The world economy will bounce back in 2010 with growth of 2.4 percent but could slump back into recession if state stimulus spending is wound up too early, the United Nations said.The UN's preliminary report on the "World Economic Situation and Prospects 2010" cautioned that a "premature" removal of state support could trigger the second part of a "double dip recession" after last year's contraction.World gross product fell by an estimated 2.2 percent in 2009"Premised on a continued supportive policy stance worldwide, a mild growth of 2.4 percent is forecast" for 2010"Mild" growth of five percent in world trade volume was forecast for this year, after falling by a record 13 percent last year.The UN warned that the recovery was uneven and conditions for sustained growth were fragile, with consumer demand and investment remaining weak as unemployment continued to rise, especially in wealthy nations.It cautioned against any early move by governments to unwind a total of about 2.6 trillion dollars of economic stimulus measures for 2009-2010 in the wake of the financial and economic crises."The rebound in domestic demand remains tentative at best in many economies and is far from self sustaining," the report said."Much of the rebound in the real economy is due to the strong fiscal stimulus provided by governments in a large number of developed and developing countries."Industry was also restocking inventories it had run down during the crisis, reviving production, the report added.
An additional 20 trillion dollars of taxpayers' money was set aside to rescue the financial sector after the credit crunch toppled major banks.It also tempered optimism about the resurgence in stock markets."The stronger than expected rebound in equity prices worldwide may belie the fact that there are still problems remaining in financial sectors in major economies which continue to constrain credit availability and could lead to more failures of financial institutions in the near future," the report said.The report indicated that developing and least developed countries had managed to sustain growth through the crisis, albeit at low levels, allowing them to recover much faster this year.
The outlook for developed economies was more subdued, with average growth of about 1.3 percent forecast for 2010 after a decline of 3.5 percent last year.
The UN predicted that China's output would grow by 8.8 percent in 2010, just 0.7 of a percentage point up on last year and still short of the double digit rates recorded in the years up to 2007.It also forecast growth of 2.1 percent in US output this year after a drop of 2.5 percent in 2009.

What's your choice?

We live in a special time. Living in these turbulent economic times is a time when fortunes will be made by those who grab the opportunity by the tail, and not be put off by the fear. I have always said that it is the time where the divide between the rich and the average Australian is going to widen into a gaping chasm.
Yet Australia still is the land of opportunity and becoming wealthy is not just a dream but can become a reality for those who have courage and foresight to take steps to better their situation in life by acting NOW.

2010 property growth

Tony Richards, the reserve banks head economic analyst warns that 2010 may be the setting for a housing bubble if supply does not keep up with the growing population. Housing prices may move towards “undesirably” strong growth. He also warned rising housing prices may not accurately reflect the wealth of the nation, as continued growth would put housing affordability out of reach for many people. "When the price of housing rises, higher-income houses tend to benefit at the expense of lower-income households," he said. In this situation very strong growth in housing prices become unhelpful from a social perspective. He made the bold statement ''Nevertheless, if housing affordability is a concern, it will be necessary to keep working to reduce impediments to the construction of new housing, both inside our cities and at the fringes.'' What we are seeing is a lack of supply. Prices have been resilient, but the supply is not keeping up with growing demand which is causing the problem, and we will see inflationary pressure arising. And from personal experience the greatest impediments to the construction of new housing are the local councils who want to wield their powerstick at times in non rational ways.
A cautionary note: If we get this wrong there is a big economic risk

2010 world breaking point

A new year, a new decade has begun so its worthy of a new blog entry.
Life has been tiring and much has happened.
2009 has been a time when some have succeeded, some floundered and some have just about given up. I will post a short forcast for 2010.
2010 - A Breaking Point for Whole World?
Question:Is it possible that in 2010 that USA will be as badly off as Argentina was a decade ago?
Answer: Argentina's debts were not as bad as those of the USA, they were not fighting in foreign countries and depleting their treasury as the US, nor were they an empire.
The worst news is that when America crashes, no one around the world should be happy about it because this is going to affect the entire planet. It’s kind of like the collapse of the Roman Empire that was followed by a Dark Age in the economy. There is no one there to fill the vacuum. China is not going to emerge, as the Trends Journal see it, as a great power. They have 1.3 billion people and a million problems! In 2008, the last numbers that came out, China had 70,000 major riots and disturbances. What are they going to do when people are thrown out of work by the hundreds of millions because the world is not buying cheap Chinese imports which have been flooding the planet to date?
Be prepared, this is going to be a very de-stabilizing period worldwide.