Signs of a renewed global economic slowdown are mounting as Europe’s two-year debt crisis threatens to engulf Spain and spread abroad by undermining demand and investor confidence. While German manufacturing faded to its weakest since June 2009, France and Spain too have had their weakest levels of growth in last three years.
Europe’s troubles may spread internationally through trade and financial ties. As Europe struggles, there is also concern about the speed of China’s expansion. With emerging markets such as Brazil, India and Russia losing steam, too, economists are banking on the US to serve as the engine of world growth.
Casting doubt on its ability to live up to the situation, reports showed last week that the number of Americans applying for unemployment benefits rose and companies hired fewer workers than forecast. President Barack Obama said on Friday the US economy was not creating jobs fast enough, blaming high headwinds from Europe’s economic crisis for the lag.
Spain’s efforts to cajole the European Central Bank into buying its bonds have largely backfired and German Chancellor Angela Merckel yesterday rejected any suggestion of debt sharing in Europe.
While slowing global growth puts the onus on governments across the world to find ways to deliver stimulus, there is no dispute that Europe’s crisis has the potential to infect the global economy but the solution is clearly not the blame game.