ISAS Briefs

Is the United States economy on the verge or already in a recession? How much of this United States economic troubles will spill over and impact the global economy? These are still much debated questions among economists and key policy makers. A recession, let us recall, is typically defined as a sustained period (two or more quarters) of negative growth in real gross domestic product (GDP). In the last quarter of 2007, the United States' real GDP grew by only 0.6 percent. Therefore the jury is still out as far as the realisation of actual recession. The central bank chiefs and finance ministers of the group of seven (G-7) industrialised countries in their recent meeting at Tokyo, Japan, have reportedly warned that the global economy could continue to slow down. They, however, seem to have endorsed the view of Mr Henry M. Paulson, the United States Treasury Secretary, by suggesting that the United States was likely to avoid recession. Closer home, the survey of American economists by the Wall Street Journal has raised their odds of the United States falling into recession to 49 percent in February 2008 as against 40 percent in the January 2008 survey. The suggested bottom line is an emerging scenario of growth slowdown in the United States and that will in turn pull down the global growth prospects.