MONEY MATTERS

2011 started with positive traces of economical recovery and the International Monetary Fund (IMF) said that recovery is slow but on its way. In the U.S. economic recovery was said to have entered a soft patch and in Japan it was expected to rebound by the end of the year. But 2011 has come to an end but the recovery is still faltering or fragile. It is weaker than it was at the beginning of the year.

Mr. Obama was elected three years back with the expectancy to lead America and the world towards economic growth. But he has been treading a difficult path between economic compulsions and political expediency. Unemployment remains above the 9% level and the soon to be presidential elections has subjected the economic resolve to increased political needs.

Europe is in a worse condition with 44 million unemployed people. What started as bail out for the debt ridden Greece has now become a complex problem for which there is no solution. Europe’s debt was just 5% in 2010 and this itself was considered risky but in 2011 their debt had grown to 46%. This has spread to Portugal, Spain, Ireland, Italy and Belgium. Some of their public debts range from 110% of GDP to 166%. Germany and France have a debt in the 80-90% of GDP range. It has been assessed that Europe’s growth will dip from 3.4% in 2010 to 1.8% in 2012.

So far the eurozone affairs have not affected Asia but the fear remains that Asia will be affected by the economic crisis. The weakening of global demand for Asian exports will set off the recession in Asia. Tourism is a prominent component of the GDP for many Asian countries. Continued recession in the U.S. and the European countries will affect tourism revenues of many Asian countries.

United Nations report that the world is on the brink of one more recession. It has been predicted by the “World Economic Situation and Prospects 2012” that 2012 will be a “make or break” year for the global economy. Let us hope for the positive.

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