World Economy Still At Risk

The Global economy is showing timid signs of recovery, but experts have warned that the crisis was not over because of the rising unemployment and a shaky banking sector. Encouraged by a series of upbeat economic results, President Barack Obama last week said: �The United States could be seeing the beginning of the end of the recession.�

Meanwhile, the Chinese economy continues to show stronger growth. Financial markets have also been boosted from record lows earlier this year. �There are signs of a deceleration of the recession,� a former senior official at the International Monetary Fund (IMF) told AFP on condition of anonymity.

The risk of a new systemic shock like the collapse of US Investment bank, Lehman Brothers last year now appears to be a distant prospect. Cinzia Alcidi, an economist at the Centre for European Policy Studies in Brussels said: �Countries will use any means possible to avoid the collapse of their financial establishment.�

�We have managed to avoid the collapse of the house of cards of the global finance,� Elie Cohen, an economist at France's National Centre for Scientific Research emphasized. The economic situation is still uncertain and the end of the recession will not automatically mean a return to sustained economic growth.

Francois Bourguignon, former Vice President of the World Bank said: �The World economy is going to stagnate at a low level for a vey long time.� Elie Cohen further disclosed that the crisis had been subdued but its effects were still very serious, adding, �One major test ahead will be the sharp rise in global unemployment.�

The International Labour Organisation (ILO) has stated that the number of unemployed people around the world could increase by about 59 million this year, compared with 2007, which recorded a rise of 31 percent.

�In an economy that stops contracting, but grows weakly, unemployment will continue to rise,� Bourguignon reiterated. This means that incomes of households will continue to suffer and consumption, which is one of the major engines of economic growth, could be severely reduced. The capacity of banks to recover is another source of worry, particularly in Europe, where companies depend on the banking system to finance their investments.