Fiscal austerity, a global problem

The figures indicate that industrial production has decreased in many parts of the world, thus imposing further challenges for economies in conditions in which they try to implement fiscal austerity measures, no regress again in recession, informs Financial Times.

Asia – the region leading to the industrial production, whose economies are heavily dependent on exports – production to China, South Korea, Taiwan, India and Australia indicate a weakening of activity in June.

The overall level of activity suggests continued expansion factory production, but the monthly growth rate, it is below the previous months.

“China remains strong return, but is obviously quickly moderate the rate of growth recorded earlier this year,” said Brian Jackson, economic strategist at RBC Capital Markets in Hong Kong. He added that concerns about slower growth could lead to a restriction on the assessment of China’s Yuan, whose exchange rate has gained some flexibility against the U.S. dollar, after two weeks.

“A slowdown in activity in coming months could lead Beijing to impose a rate setting,” he explained Jackson.

Last weekend G20 meeting held in Toronto, Canada, was marked by concern about the fact that a fast implementation of fiscal austerity measures would have negative effects on the global economy, affecting the most sensitive sector for the moment, demand internal.

Some economists are concerned that monetary policy in the United States and Western Europe quickly reach the limits of the capability of this instrument, causing a drop in demand a new global recession.

Although the data does not suggest this, they are stressed that many parts of the global economy struggle to rebuild momentum.

U.S. figures suggest that the economy loses power, despite being received unprecedented government support through monetary and fiscal policies. Production index, although it preserves indicates a growth area, however, fell more than estimated.

Unemployment in the United States seems to be stuck at a level below 10 percent and hopes of a possible decline disappeared Thursday when a new wave of applications for unemployment has reached unexpected. David Semmens, American economist at Standard Chartered Bank, said that applications for unemployment benefits “are intended to remind us that the redundancies in the United States is at a high level, and employers’ appetite for new employees remains weak.”

In the euro area manufacturing index indicate consecutive expansion for nine months, but with a moderate growth rate, indicating also that not all means of production are used. Germany, whose exports are very competitive and benefit from the depreciation of the euro in recent months, leading to growth rate.