It is sometimes said that the best research confirms something that is already known. So the International Monetary Fund has revised its forecast for global growth this year to 3.3% from the 3.5% figure it suggested in April, and has reduced its expectation of growth next year to 3.6% from its earlier figure of 3.9%. Unsurprisingly, most metal prices were down on the week.
In a similar vein, the World Bank forecast that growth in the East Asia and Pacific region would decline to 7.2% this year from 8.2% in 2011, before increasing to 7.6% next year. It added that China would slow to 7.7% growth this year from 9.3% last year, but should recover to 8.1% next year.
At the same time, the HSBC composite purchasing managers’ index, which covers both manufacturing and services, rose to 50.3 in September from 49.9 in August. The improvement was driven by services, as activity in the manufacturing sector declined last month.
Another welcome development was a decline in unemployment in the US, which dipped to 7.8% in September from 8.1% in August. The figure had been between 8.1% and 8.3% during the first eight months of this year, and its decline is certain to be used as an argument in the US presidential election.
The eurozone’s problems continued to loom in the background. The zone’s finance ministers launched an e500bn (£312bn) European Stability Mechanism to support troubled member states, and eventually replace the already-running temporary European Financial Stability Facility. This was accompanied by praise for a “robust and permanent firewall”.
But the ministers also said that Spain was in no need of a bailout because it was managing to fund itself in the bond markets. And they have insisted that Greece must make further economic reforms to obtain financial assistance, even as German chancellor Angela Merkel visited Athens to stress the zone’s attachment to keeping Greece within the eurozone.
But an increasing number of economists and commentators are starting to note that austerity is making it difficult for troubled countries to meet their original targets, and that ratcheting up austerity to compensate for missed targets was pushing Greece - and possibly Spain in due course - into a recessionary spiral.