First, the good news: the global recession is showing signs of tapering off, as six of the world's top ten economies that were in the
grip of recession have announced their unhoped-for return to the growth
path. While the world's largest economy, the US, could be finally leveling out,
France and Germany, which were expected to face a decline of 0.3% in their GDPs
for the second quarter (April-June) of 2009, have recorded a surprise growth rate
of 0.3% each, joining the list of the economies which are out of the red.
With China and India already growing at a decent rate, albeit at a pace much
lower than what they managed a few years back, Brazil growing by 1.5% in the
second quarter, and Japan well out of the wood, this could be the beginning of
the end of one of the worst global recessions, as these economies account for
about half of world GDP in PPP (Purchasing Power Parity) terms.
And now, the bad news: along with signs of global recovery, fears about the
next bubbles have also started taking shape. And, worryingly, the next bubble
could be of Chinese origin, what with hedge funds and institutional investors
with loads of money to burn heading towards China, the hottest economy today
with a projected 8% GDP growth that towers air miles above that of any other
major economy. Reports indicate that the Shanghai market index is up 60%
since the beginning of this year, with trading equaling that of the New York
Stock Exchange. Thanks to the substantial increase in bank lending, which
reached 1000% year-on-year last December, the Chinese real estate is booming,
sending the average prices of new homes up by 6.3% in 36 cities in June this year.
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