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UPDATED: July 12, 2010 NO. 28 JULY 15, 2010
Too Early to Cheer Up

The world economic recovery has stumbled since June due to the European debt crisis and lackluster performance in major economies. Fears of a potential "double-dip" recession in the second half of this year or early next year are growing.

The global economy has lasted through the worst period from the second half of 2008 to the first half of 2009. Is another recession imminent? Most economists have ruled out the possibility but uncertainties in the world economy have become hurdles on the road to a lasting recovery.

The largest threat stems from Europe because of serious debt crises of PIIGS. Although a consensus on cutting government deficits and sustaining economic growth was reached at the recently concluded G20 summit in Toronto, there are still worries about negative impact on growth from attempts to cut deficits when the world economy is at a fragile stage of restoration.

In the United States, a situation of high unemployment can't be called "ameliorated," despite a one-year lowest rate of 9.5 percent recorded in June. The consumer confidence index suffered a big drop in June, from 62.7 in May to 52.9. That was also the first decline in four months.

Even in China, which is considered to be re-starting the engine of the world economy, signs of slowdown are rearing their ugly heads. Its purchasing manager's index in June—52.1 percent—declined for the second consecutive month. A slowing performance in the manufacturing sector has ignited worldwide concerns over the sustainability of the country's growth. Meanwhile, the country is facing a complicated situation—it has to balance continuing stimulating the economy, adjusting economic structure and easing inflationary pressures.

These signs of faltering recovery have dampened investors' confidence, triggering a nosedive of the world's major stock markets at the end of June, and in turn, aggravating the situation.

The world economic recovery is bound to be uneven and slow. Whether a "double-dip" recession is impending or not, it will take longer than expected for the whole world to resume pre-crisis growth.

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