Signs of Economic Stablilization Emerge
May 26, 2009
At their meeting in late April, G-7 finance chiefs predicted “weak economic recovery will start to take hold in coming months” and that “recent data suggest that the pace of decline in our economies has slowed, and some signs of stabilization are emerging.”
Some of the news that has boosted their expectations is the rebound in German business confidence, signs of recovery in China, and new home sales and stabilization of existing home sales in the United States.
In Germany, Bloomberg reports
Shine a Light buy , interest rate cuts and government stimulus packages boosted expectations that the recession in Europe’s largest economy will ease later in 2009. Chancellor Angela Merkel’s coalition plans to spend about 82 billion Euros ($107 billion) to stimulate growth through such measures as tax breaks and investment in infrastructure. The plan also includes a 2,500-euro payment to people who scrap their old cars and buy new ones.
The International Monetary Fund forecasts China’s growth rate to be 6.5 percent, which is considered strong given the global context. China is expected to maintain relatively strong growth because its export sector makes up a smaller percentage of its economy compared with other countries, channelnewsasia.com reports. In comparison, the global economy is projected to decrease by 1.3 percent in 2009 due to the financial crisis.
In the U.S. market, new home sales were higher than expected, providing further evidence that the market may be stabilizing, Bloomberg reports. The combination of lower mortgage rates and tax credits for first-time homebuyers is likely to support sales in coming months.
In addition, even though existing home sales in the United States declined from February to March, the market appears to be stabilizing with modest monthly ups and downs, says Lawrence Yun, chief economist of the National Association of Realtors. First-time buyers are driving the market, which is critical to recovery.
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