A global slowdown

Date posted: July 6, 2012

We’ve heard about the economic problems in Europe, and some economists now think Europe is in a recession. The recent job numbers in our country have also been disappointing. Is the entire world now going in reverse? N.C. State University economist Mike Walden answers.

“Well, I think reverse might be too strong, but many economists … are seeing a global slowdown. You mentioned Europe. Clearly Europe had a big problem. Western Europe with the so-called euro crisis. That appears to be causing some of their constituent economies actually going perhaps technically into a recession. So Europe is slowing down.

“China, which, of course, has enjoyed very, very high growth rates over the last 15 to 20 years, also appears to be slowing down. One reason being is their customers: China, of course, manufactures a lot of products and sells them to other parts of the world. If their buyers like in Europe or here in the U.S. are slowing down, China’s not going to sell as much. And so China appears to be at least entering a slow growth phase. Interestingly … recently the Chinese Central Bank cut their interest rate, I think in order to deal with this.

“And then of course you mentioned our country. We’ve had disappointing job numbers recently. We’ve had a downward revision in the gross domestic product growth rate.

“So, yes, the world is interconnected. This is something that’s a mark, I think, of the 21st century economy. And if one part of that interconnectedness does slow down, unfortunately it tends to make the other parts go in the same direction.”

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