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A second Great Depression has been avoided but a full economic recovery remains two years away, Nobel Prize-winning economist Paul Krugman said today.
Krugman told a conference in Kuala Lumpur that the worst of the crisis is now behind us thanks to aggressive stimulus packages from governments across the globe. But he said that the world economy faces several years of slow growth as unemployment rises and governments are forced to rein in spending.
The Princeton economist said that the US economy may now have hit the bottom: “My guess is that August is probably the trough month.”
But hopes that the global economic recovery will be fired from Asia took a knock amid signs that Japanese manufacturers are wary about expanding production.
Despite activity in the sector expanding in July for the first time in over a year, manufacturers forecast an 8.6% drop in machinery orders for the sixth consecutive quarter. The figures are considered an indicator of capital spending for the next six to nine months.
Reader views (1)
Hooray for economists that rare breed who remain undaunted despite all of them failing to predict the recession which was obvious to many. Where are most of them employed? Banks - enough said, Academia and Governments. The problem is their theories and models only work in normal times when you don't need them, they have little understanding of human behaviour. Of course once we get back to 'normal' we can get back to oil and consequently food price escalation. When will anyone ever suggest that world population is too high, I doubt that such thoughts are allowable in an idiocracy!
- Joe Hockey, London England
