Sluggish global economy stares at fiscal cliff in 2013

India and China will be key for the global economy to grow by even a modest three percent in 2013, after bouts of debt turmoils across continents pushed it to fiscal precipice and an anaemic growth rate in 2012 left policymakers and politicians at crossroads.

hidden December 20, 2014 14:54:28 IST
Sluggish global economy stares at fiscal cliff in 2013

New Delhi: India and China will be key for the global economy to grow by even a modest three percent in 2013, after bouts of debt turmoils across continents pushed it to fiscal precipice and an anaemic growth rate in 2012 left policymakers and politicians at crossroads.

Coined by the influential US Federal Reserve chief Ben Bernanke, 'fiscal cliff' -better described as a combination of spending cuts and tax hikes-seems to be the lingo for problem-ridden world economy in the New Year.

Sluggish global economy stares at fiscal cliff in 2013

The other projections call for a growth rate of 2-3 percent for the global economy in the new year. Reuters

If emerging markets such as India and China grappled with spiralling inflation and risks of asset bubbles, the US and Europe remained almost stagnant despite record low interest rates in 2012.

Adding to the economic gloom, the 17-nation euro zone, a grouping of nations that share the common currency euro, continued to be bogged down by debt crisis which also took roots in Italy and Spain while suffocating Greece.

Though slow revival is happening in some emerging economies and developed nations, as the International Monetary Fund (IMF) recently said, "the outlook for growth remains weak with appreciable downside risks". Going by IMF projections, the world economy is likely to expand 3.3 percent this year, way lower than 3.8 percent growth seen in 2012.

The other projections call for a growth rate of 2-3 percent for the global economy in the new year. To start from Europe, the epicentre of debt crisis, the economic situation is jittery and the eurozone has again slipped into recession-generally referred to as two straight quarters of negative growth.

Hundreds of billions of dollars worth bailout money has been absorbed by ailing Greece but the debt turmoil has only spread to other European nations, even pulling down some governments.

While excessive risk taking ways triggered the 2008 financial collapse in the US, now it is austerity as well as lack of strong united actions among European nations that is roiling the world economy. For instance, the euro area economy shrunk by 0.1 percent in the 2012 September quarter, following a contraction of 0.2 percent in the previous three months.

Moving away from the sick Europe, emerging markets such as India and China too are reeling under slowdown pangs. However, compared to many of the ailing developed economies, these nations are the remaining bright spots in the dark economic firmament.

However, expectations are high for China to return to eight percent and India to over six percent growth in 2013, which in turn would help global economy to achieve a modest growth. As a corollary, jobless rate are as high as nearly 12 percent in some European countries while it is in high single digit in the US.

PTI

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Gadget lovers take note: 2013 will see slimmer, more powerful devices
Tech

Gadget lovers take note: 2013 will see slimmer, more powerful devices

iPhone 5, iPad Mini, Nexus 7 and Galaxy SIII rocked the devices market in 2012, but as gadgets get slimmer, sexier and more powerful, similar to those seen in 007 Bond flicks, gadget enthusiasts are in for a treat in 2013.

New Year resolutions for Sonia, Manmohan and Opposition
Politics

New Year resolutions for Sonia, Manmohan and Opposition

Some people don't make New Year resolutions. We are doing so on their behalf in the hope they read it and do something about it

Coronavirus Outbreak: Multi-notch sovereign ratings downgrade likely in 2020 due to sharp fall in oil prices, says Fitch
Business

Coronavirus Outbreak: Multi-notch sovereign ratings downgrade likely in 2020 due to sharp fall in oil prices, says Fitch

Fitch said the most common rating category from which multi-notch downgrades have occurred is 'B', confirming weaker sovereigns are more prone to crises.