TD Economics: Recovery is filled with Risk

Author: shastadaisy~

The measures taken to revive the global economy has achieved their primary purpose, however, a new stage has been set for a challenge that will constrain the pace of economic expansion according to a new report from TD Economics.

Emerging markets have a risk of inflation, however the recovery scenario in developed countries look different from that in developing countries. We have the emerging markets of non-Japan Asia and Latin America being less directly affected by the financial crisis and recession; the weakness they had resulted from exposure to others through trade and finance.

Once financial conditions stabilized, and the decline in global demand slowed, we saw improvement in the value of their exports when commodity prices increased.

The Canadian and U.S. economies are expected to experience growth close to 3% in 2010 and 2011. This is not terrible news, however it suggests that there is slower recovery compared with past business cycles.

In Canada, the forces that will contribute to the slower recovery includes limited growth in U.S. demand for Canadian exports, the strong Canadian dollar, the Canadian real estate market cooling down and constrained growth in consumer spending.

Adding to the limits on growth will be the eventual rebalancing of fiscal policy.