Tuesday, June 9, 2009

Impact of global recession

The sub-prime mortgage bubble and other financial market excesses may have its origins in the cheap money policies of US Fed and the recklessness and greed of Wall Street. But the impact of the sub-prime induced economic recession, manifested in the sharp negative shock on the global demand for high-value goods, has been more pronounced outside the US.

The countries hardest hit have been those that are most involved in the production and export of these high-value consumer durables, capital and investment goods, and who trade in them. Among the major economies, Japan and Germany have seen the biggest falls in output, whereas among emerging market countries, the biggest contraction in output is seen in the export-dependent East Asian economies for whom these high-value goods are an integral part of the production chain.

(HT: Freakonomics)

1 comment:

Rebeca said...

It is good to see that Dr Mahathir never retires and still keeps a careful eye on the world economy. However, since his original East Asian proposal for a gold backed economy, the American and world economy has degenerated to the point of imminent collapse. Veteran American political economist and Statesman Lyndon Larouche has consistently proposed a world solution rather than a regional one.