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Prof. Norman Bailey comments on disturbing global economic trends

Global economic trends are disturbing
World trade is not picking up, and only a handful of countries are recovering strongly – but Israel is among them.

The most recent world economic data show a disturbing ongoing tendency towards stagnation or even mild recession and deflation. Trade is not picking up to any substantial extent except in northern Europe and China. One result of this is a growing tendency on the part of several countries to take measures to weaken their currencies, especially since they blame US quantitative easing (monetization of debt) and the resulting decline in the value of the dollar vis-à-vis other currencies for their export woes. Thus there is no impetus to growth on the trade side of the ledger and a worrying trend towards competitive currency manipulation. In the US, still by far the world’s largest economy, growth is minimal, unemployment is not improving and the average standard of living (mean income) is down 7% from the pre-2008 level.

There is no help on the investment side, either. Capital goods orders in the US are down 4% from the beginning of the year and capital expenditures in general are at zero growth. The same is true for Japan and for much of Europe with the exception of Germany. The major developing countries: Russia, South Africa, India, Brazil, Indonesia and Turkey, show similar patterns of stagnation, mild decline or anemic growth in both trade and investment. China again is the major exception.

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