This page deals with economics and business issues,concerning Latin America, and the global economy.-
Friday, July 06, 2012
Global economy risks and economic policies
The ECB, has decided to set the interest rate down to 0,75%, for the first time below 1% , since the euro era began some years ago. China Central Bank, also has move down its interest rate by 0,31 percentage point to 6%.
With normal circumstances those decisions ,would have been evaluated by markets and analysts a corrective ones within some adjustment range. But, in these days of uncertainties, markets and analyst wonder whether it is too little too late for the global economy ,to avoid a down turn.
China is the second largest economy (behind the USA), while Europe is the first economic bloc of the world. Thus , undoubtedly both have a strong effect on the current expectations about the global economy for the second half of this year. The signals are clear enough in one direction : decreasing economic growth. Markets have become more pessimistic as long as they anticipate such outcome.
What are the implications ?: it seems that any country or for this matter any economic bloc, is not capable of doing on its own ,what it requires a broader and coordinated approach. Isolated Economic policies, have limited impact to change expectations . Perhaps the same some implemented jointly with other Central banks, would have gone further concerning expectations .-
The second implication, come out from the fact that in time of economic crisis, economics and politics are closely connected. Thus , Economic policies without a political component(for instance all Central Banks acting at the same time) do not work well . It becomes less effective, because in these cases, it is expect something different or even unusual.