A Global Recovery Without Growth

OECD Expects A Period Of Stunted Growth Over The Course Of 2010

The good news first, so no-one loses hope: Next year will see, in Canada and the rest of the industrial world, an economic recovery from the recession we currently find ourselves in. Now, the bad news: there will be little or no growth in the economy as part of this recovery. So says the global Organization for Economic Co-operation and Development in a report published this week which will leave many people wondering whether to smile or frown. The general consensus has been that the recession is heading for an end later this year with a cautious but pronounced period of growth next year. The Bank of Canada for its part claims that growth may even reach 2.5%, but the OECD thinks differently.

This report seems to be more pessimistic in general than the assumptions of the World Bank, with the OECD expecting a period of stunted growth over the course of 2010 which will see the Canadian economy grow by a small margin of 0.7%, lower than the USA’s figure of 0.9% and the world in general at 2.3%. The World Bank, which does not have a breakdown for Canada, expects the US to have growth of 1.8%. Things could be worse of course as, according to the OECD, the United Kingdom will experience no growth at all. It should also be noted that the OECD forecast is just one of many, and the most pessimistic of them all so far – forecasts certainly do not always reflect the eventual truth.

What does seem universally accepted is the belief that the latter part of this year will see an end to the market contraction which has characterized 2009. Aside from that, it is difficult to know what to believe, with market figures completely failing to provide a uniform indicator of how the future will pan out. Goods and retail purchases have been rising in Canada and above, for example, but the housing market, particularly in the United States, has failed to perform as well as had been hoped. Reading the trends is likely to remain a lottery for some time to come, although news that the recession is soon to be over will hopefully become a self-fulfilling prophecy, with consumer confidence expected to grow as a result.

On the last point, the OECD and the World Bank seem at least to be of one mind. The global recession does not have long to run, whichever way you read the figures. OECD member countries have seen market contraction in the region of 4.1%, expected to be the overall figure for this year. In March, this figure was estimated at 4.3%. Given the horrors of 2008 and much of this year, the recession was inevitable, but it looks to be nearing its end. Economic strategists seem to be of a single mind on stimulus packages too, giving the concept a cautious thumbs up, urging that the governments implement the programs included under those packages, and advising against further action to pump economies up once recovery does appear – correction is good, micro-management may be detrimental.

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