Japan, the fourth largest economy (after US, China and Europe), is in recession. Europe is now struggling in a slowdown as their GDP growth was almost flat - France 0%, Germany 0.5%, and UK 0.7% in the second quarter. In North America, Canada experienced a minus 0.4% contraction in the same quarter and unspectacular growth in July and August, though some think Canada might still escape a recession. United States is in slightly better shape with a modest GDP growth of 1.0% in the second quarter. With a $450 billion job bill proposed by President Obama this Monday, the US economy might improve under the new stimulus. He might not probably get everything he intends, but the Congress might approve at least parts of the bill for 2011 and 2012. Furthermore, the Chinese government seems to have brought her hot economy down to a soft landing in the summer, spurring hopes of looser monetary controls and of higher demand of commodities. Overall, the global economy might be going back on the recovery track.
Nevertheless, some worry about the uncertainties after 2012. Almost all governments have been weakened by financial problems in the fight against the recession. It will take years to bring their debts to manageable levels, so the shaky global economy might be only growing very modestly in 2013.
At this right moment, the capital markets are gripped by fear with a rumoured impending default of Greece. Some German bankers think an orderly bankruptcy is the only solution for Greece. After Greece, the next nation in trouble might be France with her tremendous exposure to debts of fellow members. It is unthinkable of the collapse of the Europe community and I believe they would find a working solution at their dilemma. The best way for investor to handle this fear is not to give in to despair, while keeping a baseline safety plan.
Besides woes in the economy, there is a storm of political unrest in North Africa and Middle East. Governments have already fallen in Tunisia, Egypt and Libya. Other countries now face similar problems, including Syria, Yemen and even maybe Israel. Inflation, particularly of food, might have played a factor in the demand of changes by the restless people. Elsewhere, there was a large scale riot near Guangzhou in China because of the conflict between local people and migrant workers. In Canada, there was a surprising violent riot in Vancouver by the usually quiet Canadians who were upset about the loss of a hockey game to Americans. In United Kingdom, widespread riots suddenly broke out in London and neighbouring cities; the officials pointed out the large role of criminals and vandals in these riots.
Global warming is no longer a scientific curiosity, and all can feel the changing world climate. It seems that storms are making bigger every year. Recent hurricanes and typhoons have brought scores of death, rains, and billion dollars of damages. Floods are now common all over the earth. These natural disasters are likely to have eroded the wealth and capital of global economy.
Finally, the world population is expected t o reach 7 billions at the end of 2011. Our population was 5.5 billions in 1980 and 6,8 billions in 2009. The rising population will of course increase economical growth, but on the other hand, it adds to the burden on the ecology and the food supply - from land or the sea. In addition, the progress of the emerging nations have been losing fertile farm land to manufacturing.
In conclusion, the global economy is likely to face more uncertainties in 2011 and beyond: financial problems, recessions, unbalance of trade, unequal share of wealth, technological changes, social unrest, political unrest, climatic changes, ecological changes, etc ... So, one can only keep an optimistic mindset while keeping guard against sudden dangers in the capital world .
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