- The Washington Times - Saturday, July 25, 2009

Europe remains mired in a deep recession while Asia is beginning to rebound robustly from the worst global economic crisis in postwar history, according to early reports on second-quarter economic activity from around the world.

The British economy declined at a stunning 3.2 percent annual rate during the second quarter, the government reported Friday. That was more than twice as steep a descent as economists predicted. Over the past four quarters, the British economy plunged 5.6 percent, its deepest downturn since records began in 1955. Except for World War II and its aftermath, the descent is thought to be Britain’s steepest since the 1930s.

The report “provided a really nasty and disappointing shock, with the rate of contraction slowing far less markedly than expected,” said Howard Archer, chief European economist for IHS Global Insight. During the first quarter, the British economy plummeted at a 9.3 percent annual rate.

“The sharp second-quarter drop in GDP suggests that hopes for recovery over the coming months are based on even rockier ground,” Mr. Archer said.

The Russian economy shrank 9.6 percent in June on a year-over-year basis, the Russian Economic Ministry reported Friday. Moody’s Economy.com now expects the Russian economy to contract more than 8 percent this year.

“Russia still relies on energy to drive growth, and it will play an important role in pulling the economy out of recession,” said Melanie Bowler of Moody’s. Oil prices are expected to rise gradually next year, she said. “Should prices fail to rise, the Russian economy could struggle longer than forecast,” she said.

None of the major countries among the 16 that use the euro currency has reported second-quarter economic results yet. However, the IMF expects the eurozone economy to contract 4.8 percent this year, compared to 4.2 percent in Britain.

Asia, in contrast, has already begun its recovery.

South Korea’s economy, the region’s fourth-largest, expanded at an annual rate of 9.5 percent in the second period, the Bank of Korea announced Friday. During the first quarter, South Korea eked out growth of 0.5 percent following the breathtakingly sharp contraction of more than 20 percent in the October-December period.

Singapore’s economy also surged during the April-June period, expanding at an annual rate of 20 percent, its first increase in a year.

Earlier, China, the world’s third-largest economy, reported that its gross domestic product had expanded by 7.9 percent during the year ending in June. That represented a significant acceleration from the 6.1 percent rate achieved during the 12 months ending in March.

Economists expect Japan, the world’s second-biggest economy, to report next month that its economy expanded for the first time in five quarters.

The Commerce Department will report U.S. second-quarter economic growth next Friday. Alan Blinder, the Princeton economist who served as vice chairman of the Federal Reserve during the Clinton administration, said the rate of decline will likely be “slightly negative.”

Nigel Gault, chief U.S. economist at IHS Global Insight, thinks GDP declined by “less than 2 percent” in the second quarter, significantly more slowly than the 5.5 percent contraction in the first quarter and the 6.3 percent descent in the fourth quarter.

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