Developed countries are now seeking the light at the end of the tunnel of the economic crisis, while trying to establish the truthfulness of the view that the world economy is now emerging out of this tunnel. Opinion is divided among the experts when trying to judge an ever changing landscape through the looking glass of economic indicators. These indicators seem to be fluctuating, either slightly - or barely - improving, or going back to their previous values of loss and decline. In this vein, the massive financial liabilities on the U.S. Treasury are worrisome, now surpassing a trillion dollar in budget deficit over eight months, as a result of federal financing of bankrupt companies. The seriousness of such a deficit does not only affect the American economy, but also the entire world economy, further fuelling fears of a potential devaluation of the greenback. This pushed the United States to reassure China that its assets and investments in America - estimated at about a trillion dollars - are safe. Meanwhile, some are reassured that the economic downturn has bottomed, and that the cycle of economic activity has been restarted. Others, however, see the opposite of this, with the industrial sector trying to understand demand trends to balance it with its investment, but to no avail. The economy, like the seasons of the year, has cycles. For economists, this is a firmly established belief, as they have been scrutinizing the horizons looking for signs of change in economic prospects. Following the last two quarters of economic stagnation, where economic activity suffered heavily at rates seldom seen since the Second World War, researchers on economic developments have started noticing some signs of recovery and growth signalling that economic spring is now on its way. This conclusion is only based on certain indicators going “upwards” away from their previous trajectory, as evidence of some kind of activity. According to corporate purchasing indexes, the US economy is likely to improve and the Euro Zone economy to stabilize. The marine freight index (Baltic Dry Index) leaped since January, reflecting an improvement in global trade and a hike in the prices of oil and some minerals generating hope of a resurging demand for goods. FAO's semi-annual World Food Situation report notably mentions that the prices of some types of cereal crops have improved. It seems that the American and European stock markets have since almost wiped out the losses they incurred since the beginning of the year. Up until now, however, indicators have not entirely dismissed further economic deterioration, even if the rates of decline have slowed down, standing at lower values than those previously held. National accounts in the first quarter were barely less tragic than the accounts of the last quarter of 2008 in the U.S. and the EU. While industrial production in the major developed countries has stabilized since the beginning of the year, it still remains about 15 percent lower than its previous level a year ago in the United States, standing at 20 percent in France, 25 percent in Germany, and 35 percent in Japan (the “Alternatives Economiques” monthly publication). Both the U.S. and the European economies have lost 4 million jobs each in the past six months. This influential trend continues downward at a lower rate. In any case, talking about a full economic recovery seems premature. At best, the recession could have bottomed out but it is clearly not over yet. While the most optimistic scenarios expect a return to positive growth rates before the end of this year, two, three or even five years must first pass before the drop distance is reversed and the pre-crisis rates of production are regained. This recovery phase is linked to equilibriums between positive forces and not in the least weak but negative forces that curb demand. The Russian President did not go against these given facts when he asserted - in the Russian Economic Forum- the need to be patient and not to be hasty in expectations about an approaching end to the global financial crisis, saying that it «has not yet reached its worst phase». While the governor of the U.S. Federal Reserve Ben Bernanke believes that the phase of economic downturn in the U.S has begun to recede, he observes that this does not necessarily mean that the country is about to steer clear of its financial crisis. Many factors continue to influence the consumption index, including high unemployment rates and the declining liquidity in the real estate sector, in addition to the constraints placed on the credit market. In order to forecast the future economic prospects, macroeconomists examine past events. This is what the International Monetary Fund did, having studied the symptoms of the recession in 21 developed countries since 1960, in order to forecast future economic events. The Fund observed that an ordinary contraction in the economy lasts less than a year on average, between its start and its peak prior to the crisis. It also concluded that recovery rates are faster than the rates of decline, as if there is a certain lifeline that brings the economy back on track. In comparison with measured previous global recessions, the Fund's view of the current recession is that it is not ordinary, and exhibits two main features: it overlaps with a widely reaching financial crisis, while it is a globally expanding recession. These two factors make the current recession harsher and more enduring. A recession that is simultaneous with financial crises dampens projects and investments, and deprives them of funding, thus weakening domestic demand. A return to the peak pre-collapse rates of economic activity requires patience, which means that the road to recovery is long and arduous.
