Eurostat, the EU`s Statistics Office, specifies that the 15 Euro zone countries` economy has fallen for 0.2 percent in the third quarter, as compared with the second quarter when deficiency was also 0.2 percent. Two sequential growth reductions are widely accepted determinants when dealing with technical recession. New information on numerous compensation requests for unemployed, which have reached the highest number in the past seven years, confirm an obvious stagnation of the American economy. According to the US Department for Labour, 516.000 Americans have registered for receiving compensations for unemployed during the previous month.
In the light of these dramatic circumstances, the G20 summit was organised on the highest level in Washington. Chiefs of governments and monarchs have decides to meet so as to harmonise their opinions on global crisis.
Experts are convincing that the financial crisis has come to an end and that it takes to eliminate consequences, but they also stress that the recession, which is every financial crisis` permanent partner, was not resolved. Henry Paulson, US Secretary of the Treasury, is one of the passionate defenders of this attitude, who tries to demonstrate in finer manner then last days of George W. Bush. Although, there is quite a number of his supporters.
On the other hand, there are people who say that the crisis is about to come and that we haven`t experienced its ugliest side. The third group believes that everybody knows what the problem is, but that no one can offer a solution, and that a world cannot be anymore organised as it was up to now. The G20 Summit has, however, given some very important directions, and the announcement of the concrete measures, the implementation of which will help the world to surpass the most serious crisis since the World War II, is expected to be next year on March 31st. G20 leaders have agreed in reshaping the International Monetary Fund`s and World Bank`s system of functioning, which was established by the Bretton Woods Treaty after the World War II.
"We must not permit any financial paradise that is beyond every regulation. That kind of order was complete insanity," said pointedly French President Nicolas Sarkozy, as the initiator of the G20 Summit.
The IMF is reforming, furthermore because a large number believes that US and EU influence should be reduced in this area, in order to let expanding economies taste some responsibilities. It will soon be known whether these countries are prepared enough for such task. The next summit, which is expected to be held in April 2009, will reveal the precise agenda of the most important financial reforms in the past 70 years and, probably, the destiny of our planet for the next half of the century at least.
"Europeans are ready to reduce their presence in international financial institutions and to hand space to China and other expanding economies," says Jose Manuel Baroso, President of the European Commission.
Baroso also stressed for the International Herald Tribune that the European leaders are aware of their "too obvious presence" in many institutions alike the International Monetary Fund.
"Considering contacts I have made with some leaders and chiefs, as well as issues we`ve discussed, it is absolutely clear that there is openness in allowing economies in expansion to be more involved," explained Baroso, pointing out that the voice of China should be heard widely, considering its economy growth.
Currently, USA has 16.77 percent of the IMF`s electoral body, Germany has 5.88, Great Britain and France have 4.86 percent each, and China 3.66. Baroso explained that Europeans, although together they share higher percentage of electoral body than USA, have less influence, because these countries usually step out as national governments instead as a group.
An unemployment rate in USA, which was increased for 6.5 percent in October, risks seriously to be increased on 7.5 percent in the course of next year, estimates the analyst from the Dresdner Kleinwort Company. According to the statistic report for September, American import was in descention for 5.6 percent which is unprecedented, while the export also registers decrease. American economy will face a negative growth rate, and the beginning of recovery is expected to be not before 2010, estimate the experts from the Organization for the Economic Co-operation and Development (OECD).
Japan is also about to face with a negative economy`s growth rate, and OECD experts prognosticate to see slow economic prosperity of this country in this decade`s last year.
Germany, as the leading economy in Europe, has faced with the recession in the third quarter, with minus 0.5 percent of the negative growth rate reached. It was estimated that the economic fall in Germany was slight (minus 0.2 percent) during the previous quarter, but the import depression influenced on the negative economy development due to the global financial crisis.
Walther Otremba, German Deputy Economics Minister, has confessed for the Reuters Press Agency that, according to new economic indicators, his country will face the "massive difficulties and long-lasting economic crisis". German analysts agree with their country`s officials, pointing that German economy deals with very serious problems.
"The winds of financial crisis and global economic slowdown stroke German economy across its face", figuratively described Karsten Brzeski, of INF Financial Market Company.
Although China announced the investment of four billion of yuans approximately i.e. 586 billion dollars, in order to stimulate its economy growth, this country also faces with the effects of global economy stagnation. The production growth in China has failed during the October on 8.2 percent on year level, which is the worst statistic since the October 2001. Even 70.000 Chinese companies have become insolvent due to the crisis.
The international economic experts estimate that Chinese export expansion toward EU countries, USA and Japan will not be so significant as it was previously, and so will the economic expansion rate in the most populous country in the world be lower in the course of this and next year. Economic growth in China was constantly two-digits, in the range of 10.5 to 11.5 percent. Last month economic expansion was 9.5 percent and Chinese government has decided to take measures in order to stop further growth decline.
Situation in other world economies is not brilliant, and British economy deals with the most serious difficulties, which is eroded not only by the negative growth rate but also by the banking system, unstable pound and crisis on immobility market.
France has similar problems, while Russian top politicians, under the President Dmitri Medvedev`s and Prime Minister Vladimir Putin`s leadership, claim that, despite global financial crisis, their country will end up with seven percent of the economic growth.
However, Russia has suffered quite damage due to the global credit crisis and Russian government has invested thousand billions of roubles, i.e. billions of dollars, for recovery of domestic banks and many other companies that cannot afford paying back their debts. Despite the drastic depreciation oil on global market, officials in Moscow believe that there is no reason for panic, because their country has plenty of oil reserves (approximately 480 billion of dollars), which is enough for "protecting banking system and stability of Russian national currency".
Despite the recession in Euro zone, the European common currency seems to be the strongest one on global market, which explains president Sarkozy`s statement, when during the G20 Summit he said that "American dollar cannot be the only currency in the world", as it was in Bretton Woods after the World War II.
* Jelena Virovkic Ivanovic is a freelance journalist. CEV magazine is an online publication of the Centre for European Values
