Development and Finance from issue 2009/4

Péter Farkas

Mid-term Global Economic Trends and Hungary. Macroeconomic Analysis of the Institute for World Economics

- Abstract -

Around the middle of 2009, signs of stability started to emerge in the global economy (slow consolidation in the banking system, a fall in the contraction of industrial output, a slow reduction in the number of initial unemployment claims, an improvement in confidence indices, renewed investor optimism, an upswing on the stock exchanges, a stabilisation of GDP in France and Germany, etc.). It is not only the business community that is more optimistic, macroeconomic experts also believe that trends have bottomed out and the recovery has started. The fear, however, is that these hopes may well be premature; the crisis is dragging on and many signs suggest that we could be in for another lurch downwards. On the one hand, in the course of integrated (globalised) downturns accompanied by financial crises the recession lasted two years on average (with GDP dipping by 4.8% on average) and this was followed by a similar period of stagnation and depression (reducing GDP by another 2.8%). Therefore, it took 3.5 years from the start of the crisis for economic growth and a rapid upswing to commence.

Péter Farkas, PhD, senior research fellow (Institute for World Economics of the Hungarian Academy of Sciences)

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