By Liu Si
Economists remain divided on whether the global economy has started to inch back to normalcy or if it is just in the eye of a storm that shows no signs of letting up.
Bull side
On the positive side, the Organization for Economic Cooperation and Development (OECD) said Wednesday that the turning point at which its 30 member states would start to show growth is likely to arrive sooner than expected.
Jorgen Elmeskov, the acting OECD chief economist, said indicators from the major countries suggest the downturn's bottom may have already occurred or could come a few months earlier than expected.
The member gross domestic product of the OECD, which represents the developed world, remained stable in the second quarter. That was after a fall of 2.1 percent in the previous quarter.
Japan's GDP showed its first growth in five quarters in the second quarter, suggesting that the world's second largest economy has emerged from the mire.
France and Germany both showed a growth of 0.3 percent between April and June. Boosted by exports, Germany, Europe's largest economy, harvested a surprise expansion as most analysts had expected a negative reading.
Many economists expect that the US economy, which is at the core of the crisis, will rebound in the third quarter of this year.
The US economy fell at a more subdued 1.0 percent pace in the second quarter, far better than the 1.5 percent annualized contraction experts had expected.
Global investor George Soros said Tuesday the American economy "has actually bottomed" and would see growth in the current quarter largely due to government programs that pumped 787 billion US dollars into the economy.
The US Federal Reserve said economic activity was "leveling out" and conditions in America's financial markets have improved in recent weeks.
Fed Chairman Ben Bernanke has predicted that the recession would end later this year.
In Asia, China and India are picking up momentum and have been the first to shake off the effects of the global slowdown.
In the Middle East, Egypt and Syria are still growing.
In Latin America, the recession was expected to be brief thanks to the help of monetary expansion and increased government spending on infrastructure.
Bear side
While many are seeing a rebound in the global economy, others believe that it might fail to sustain its recovery and slump back into recession.
Wall Street opened sharply lower Wednesday, following declines throughout overseas markets that showed uneasiness about the economic recovery.
China's Shanghai Composite Index slumped as much as 5.1 percent, extending its drop from a 2009 high to more than 20 percent in two weeks. The major indexes in Europe also were all lower.
The International Monetary Fund (IMF), which oversees the global financial system, said in a report released Wednesday that the recovery "has started."
However, the IMF cautioned that predictable models based on past recoveries would not apply to the worst global slump in seven decades. It said, too, that the current upheaval was "far from normal."
US President Barack Obama also warned that "we will not have a true recovery as long as we're losing jobs, and we won't rest until every American that is looking for work can find a job."
Although Japan has begun to see a better performance in its economy, economists and politicians remain cautious about the sustainability of the rally.
Economists are skeptical about the strength of the recovery because governments' stimulus measures played a leading role in the upturn while employment and income conditions were still worsening.
They also argued that the budding recovery could quickly run out of steam because domestic demand remains weak.
The Bank of England, the United Kingdom's central bank, gave a gloomy prospect for the British economy in its recent Quarterly Inflation Report.
The British economy shrank by 0.8 percent in the second quarter following a steep drop of 2.4 percent in the first quarter, the fifth straight quarter of decline.
Mervyn King, governor of the central bank, said that the recession in Britain appeared to be deeper than previously estimated and the recovery would be slow. He said the level of the GDP was around 6 percent below its peak.
(Xinhua News Agency August 20, 2009)
