The Grey Chronicles

2009.November.5

The New 3R’s: Recession, Rebound, Recovery


Last 30 October, the Philippine Daily Inquirer online featured an Agence France-Presse [AFP] (2009) article—bearing the usual “Copyright 2009 Agence France-Presse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed,”— which announced that the U.S. emerges from long recession based on the recently released US Commerce data.

Although «The Grey Chronicles» is non-commercial and personal site, under a self-imposed yet different initiative of Creative Commons (see below) vis-a-vis various copyright laws, thus, this post—invoking the provisions of Fair Use—will only highlight the gist of the AFP article:

“After four negative quarters, the world’s largest economy grew at a seasonally adjusted 3.5-percent annual rate in the July-September period from the second quarter, the Commerce Department said. … The increase was the first since the second quarter of 2008 and the biggest expansion since the 2007 third quarter, when a US subprime mortgage crisis triggered a global financial crisis that subsequently hammered the world economy. (AFP, 2009)

Furthermore, AFP’s article states that the official start of recession was in December 2007. Surprisingly, the global financial crisis hit Asia only a year later. Many economist-pundits saw this as the decoupling of Asia’s economy from the globalized era. The International Monetary Fund [IMF] clarified that “Asia has not decoupled from the rest of the world … In fact, Asia’s fortunes remain closely tied to that of the global economy.”

Lately, the IMF raised its forecast for Asia, saying the broader regional economy that spans countries from New Zealand to India would grow 2.75 percent in 2009 and 5.75 percent in 2010. That’s still below the average of 6.7 percent over the past decade. Both projections were about 1.5 percentage points stronger than those estimated by the IMF in May.

World Economic Outlook October 2009: Sustaining the RecoveryIn the October issue of the World Economic Outlook by the Fund, (2009), it notes:

“The global economy appears to be expanding again, pulled up by the strong performance of Asian economies and stabilization or modest recovery elsewhere. In the advanced economies, unprecedented public intervention has stabilized activity and has even fostered a return to modest growth in several economies. Emerging and developing economies are generally further ahead on the road to recovery, led by a resurgence in Asia. … [E]merging economies have withstood the financial turmoil much better than expected based on past experience, which reflects improved policy frameworks. The recent rebound in commodity prices and supportive policies are helping many of these economies.”

“The pace of recovery is slow, and activity remains far below pre-crisis levels. The pickup is being led by a rebound in manufacturing and a turn in the inventory cycle, and there are some signs of gradually stabilizing retail sales, returning consumer confidence, and firmer housing markets. As prospects have improved, commodity prices have staged a comeback from lows reached earlier this year, and world trade is beginning to pick up.”

Similarly, the Philippine Daily Inquirer reported that in a 29 October briefing, UBS global economist Paul Donovan warned against “over-optimism on the global economic rebound, noting that small businesses in Western economies were still facing tough economic conditions and that banks were still lending below normal levels” (Dumlao, 2009). Furthermore, Donovan likened the pace of global recovery similar to the “swoosh in the Nike trademark—the world is seeing a recovery but it may not be as good as the financial markets are hoping for.”

The October World Economic Outlook [WEO] (2009) describe an intermediate path: there is a recovery, but it will be weak by historical standards. The WEO explains:

“Although Asia’s export-oriented economies were battered by the abrupt global downturn, the economic outlook for the region improved markedly during the first half of 2009.”

“Other emerging and developing Asian economies showed similar signs of stabilization, with rising industrial production in Hong Kong SAR, India, Korea, Philippines, Taiwan Province of China, and Thailand, which lifted growth during the second quarter into positive territory in several of these economies.”

“The intensifying rebound in Asia can be linked to three factors: (1) expansionary fiscal and monetary policy, which has been very aggressive in some countries; (2) a rebound in financial markets and capital inflows, which eased financing constraints for smaller export enterprises and improved consumer and business confidence; and (3) the growth impulse for industry following large inventory adjustments.” (IMF, 2009: 71—72).

More closer to home, the research group, IBON Foundation (2009), announced:

“71.4% of the 1,496 respondents to the October 2009 nationwide survey said that they considered themselves poor, which increased from 67% in the last survey round in July 2009.”

“In terms of family income, IBON data showed that 57.02 percent of respondents said their family’s income was not enough to meet their needs. This was an increase from the 53.58 percent registered in July 2009.”

“In terms of available jobs/livelihood opportunities, the October survey round showed that 47.3 percent of the respondents said there are not enough jobs/livelihood in their area, higher than the 39.2 percent in the last survey round.”

Even though the IBON survey seem bleak, the investment bank UBS upgraded its growth outlook for the Philippines for 2010. Accordingly, the Philippines’ Gross Domestic Product [GDP] is now seen growing by 5 percent next year from this year’s projected growth of 1.3 percent. The forecast for 2010 was raised from the earlier expectation of 4.6 percent.

To paraphrase Cobb, et.al., (1995), if the GDP is on the up, why is the Philippines down?


Notes:

Fair Use “is an exception to United States copyright law that allows for the reproduction of limited portions of a copyrighted works for limited purposes such as criticism, commentary, parody, news reporting, research and teaching.” Many authors treat “Fair use” as a complicated and highly subjective doctrine whereby rights to redistribute copyrighted works in their entirety for non-commercial or educational purposes is NOT granted; and using these works in a manner that is determined by a court of law not to meet the standard of fair use, one might be liable for monetary damages (Bentley, 2009).

Agence France-Presse [AFP] (2009). US emerges from long recession. Manila: Philippine Daily Inquirer, 30 October 2009. back to text.

Bentley, Jason (2009). Info, FAQs, and Forums / FAQ: Copyright and DMCA / What is “fair use?”. Scribd.com FAQ, 14 February 2009. back to text.

Cobb C, Halstead T, and Rowe J (1995). If the GDP is up,why is America down?. The Atlantic Monthly, October 1995. pp. 59-78. back to text

Dumlao, Doris (2009). UBS raises growth forecast for RP in 2010. Manila: Philippine Daily Inquirer, 29 October 2009. back to text.

IBON Foundation (2009). 7 out of 10 Filipinos rate themselves poor. Manila: IBON Foundation, 29 October 2009 . back to text.

International Monetary Fund [IMF] (2009). World Economic Outlook October 2009: Sustaining the Recovery. Washington, D.C.: International Monetary Fund, October 2009. pp. xiv, 71—72. back to text: 1 | 2 | 3. See also, IMF Research full article: Global Recovery Under Way but Likely to Be Slow, Says IMF.

Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 LicenseDisclaimer: The posts herein do not necessarily represent any organization’s positions, strategies or opinions. Read the full version of self-imposed rules for this blog: A New Year; New Rules. Unless otherwise expressly stated, the posts are licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.
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