Economic Survey 2-2012

The global economic situation deteriorated in the second half of 2011, and the negative trend has continued into 2012. GDP growth has slowed markedly in almost all countries, and GDP has also contracted in many European countries. Growth in manufacturing output and international trade has come to a halt. It is difficult for countries with high public debt and high unemployment to generate new growth under these circumstances. Weakened confidence in European banks with large claims on governments that are struggling to service their debt, and renewed uncertainty about the place of Greece in the European Monetary Union are impacting the entire euro area. Political elections demonstrate that the peoples of a number of European countries have lost faith in the incumbent governments. The results express resistance to a strongly contractionary fiscal policy and uncertainty regarding how to resolve the current crisis. The US economy was an exception in 2011, with some quarters of rising growth. Weak global demand and a substantial tightening of fiscal policy also dampened growth in the USA, as reflected in figures for the first quarter of 2012. Growth has also declined markedly in a number of emerging economies.