Regional economic experts agree: The end of the recession just means the end of the beginning of bad times.
Flickr user Rich Anderson
But what does it mean? Economic experts describe the end of the beginning of bad times.
Find the interviews linked here:
The worldwide recession may be nearing bottom or lifting,
some data suggests. The rate of job losses has slowed. Financial and credit
markets have eased. Ambitious stimulus plans seem to be working.
But these metrics hardly provide a qualitative understanding
of what the world faces in the short to medium term -- the next six to 24
months. What does the end of the recession really
look like? And how will we know when we get there?
Foreign Policy surveyed the latest thinking and contacted top economic experts to get a better
picture of the shape of things to come. We asked them to take out their crystal
balls, assess whether the recession is lifting, and discuss what's too often
left out in the sometimes Pollyannaish press stories on "green shoots."
Their consensus? The end of the recession looks much like
the recession itself. We are at the end of the beginning of bad times.
On this page, you'll find condensed versions of their
assessments and warnings. Read on to find the interviews, which were lightly edited for clarity and slightly condensed.
China
The winner
of the crisis. Beijing faces challenges in ensuring the correct type of growth.
But China looks to be the world economy's only real bright spot for some time
in the future.
"I think China's had an extremely good crisis. It's been good for
China. It was very obvious to a few people, including some important
policy people in Beijing, that the massive export growth of the past decade or
so was just not sustainable on a permanent basis; it was heading for a
collision anyhow. And in that case, something needed to change, so in some
strange way the crisis has been convenient because it's allowed them to make
dramatic monetary and fiscal policy changes." -- Jim O'Neill, head of global economic research for Goldman Sachs
"The World Bank is
not all that optimistic, over two
years. China is a large economy, but quite integrated in terms of trade and
inward FDI. So, what has happened now is: exports are still the main drag on
growth. They're very important for China, in terms of the importance of growth,
more important than in India or Brazil...exports are important and will continue to be
mediocre. What's kept growth up is stimulus.
"But you cannot undertake
this large a stimulus for too many years in a row. Even China can't undertake a
stimulus next year. In terms of momentum, when we look at next year, we don't
really expect it to accelerate. It will grow respectably." -- Louis Kuijs,
senior economist for the World Bank in China
Japan
The
situation in Japan -- which has an aging population, a gutted pension program,
and specialization in unwanted high-tech exports -- seems especially fragile.
"Japan's recession started because
of a sharp decline in Japanese exports. But the decline of exports has slowed
down and the manufacturing sector activity has declined sharply, as did
imports. That has a positive effect on GDP. Because of these factors, the
negative growth has slowed down. That's why the Bank of Japan says we're at the
bottom.
"But our GDP is much lower, 10
percent lower, than what we can produce. So, still our situation is very bad.
And, the problem is, what will be the engine of recovery? I don't know." -- Kyoji Fukao, professor at the Institute of Economic Research,
Hitotsubashi University
Africa
With aid, investment, and commodity prices set
to fall, the fallout of the global recession may be particularly harmful on the world's
poorest continent, rolling back years of development successes.
"Basically, the African financial
sectors were spared the initial round of bank failures and financial sector
turmoil because African banks weren't that integrated and weren't dealing in
derivatives and CDS and those sort of things. But when it turned into a real
world economic crisis, when there was recession in developed countries, that
immediately had a major impact on African countries on four main channels --
FDI, remittances, commodity prices, and aid. In each of these channels, the
effect on Africa was particularly devastating." -- Shanta Devarajan, chief economist for the World Bank's Africa region
The United States
The
recession appears to be ending and recovery could start as early as the fall,
economists concur. But, the recovery, described variously as "a curved L," a
"Q," and a "U" -- not a real "V" -- may be a hesitant one.
