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Global Economic Downturn Persists

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The global economic downturn is persisting. In the U.S.A., tax rebates provided only a temporary stimulus to the economy. As the U.S. real estate crisis continues, it triggered the takeover of mortgage finance corporations Fannie Mae and Freddie Mac by their regulator in early September 2008. The crisis of the U.S. real estate and financial sectors, which has gathered momentum lately, sustained high commodity prices and the deterioration in the labor market are all badly damaging consumer confidence. As a reaction to the most recent aggravation of the financial crisis, the U.S. government announced its plan to establish a well-endowed stabilization fund. As to the euro area, economic growth slowed unexpectedly sharply in the second quarter of 2008. Real GDP contracted by 0.2% quarter on quarter. Particularly, gross fixed capital formation made a negative contribution to growth, but also consumer restraint depressed economic performance. The ECB’s current projections assume only a gradual improvement in the economy.

Suggested Citation

  • Gerhard Fenz & Ingrid Haar-Stöhr & Maria Antoinette Silgoner, 2008. "Global Economic Downturn Persists," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 6-20.
    • Handle: RePEc:onb:oenbmp:y:2008:i:3:b:1
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    Keywords

    global outlook; euro area; central and (south-)eastern Europe; Austria;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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