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Recovery of the Global Economy in the Second Half of 2009


  • Anna Orthofer

    () (Oesterreichische Nationalbank)

  • Josef Schreiner

    () (Oesterreichische Nationalbank, Economic Analysis Division)

  • Klaus Vondra

    () (Oesterreichische Nationalbank, Economic Analysis Division)


The world economy has overcome the cyclical trough. On the back of extensive economic stimulus programs, most economies returned to positive growth rates in the second half of 2009, with emerging countries taking the lead. The rate of the recovery, however, diverges strongly across the different regions. Not only the emerging Asian countries grew at a vigorous pace; the U.S. economy, too, posted healthy quarter-on-quarter growth at a rate last seen six years ago. Yet, recentconfidence indicators suggest that economic growth will continue at a slower pace. While the world economic recovery gained momentum in the fourth quarter of 2009, the development of economic activity in the euro area remained below expectations. In comparison with the previous quarter, the economy of the single currency area grew by 0.1% in the fourth quarter of 2009, with growth driven exclusively by the positive contribution of net exports. Euro area domestic demand is unlikely to give growth a genuine boost in the quarters to come. Current forecasts generally point to a gradual recovery of economic activity in the euro area, which will, however, be weaker than the U.S. revival. Euro area HICP inflation returned to positive levels in November 2009. This was due primarily to base effects stemming from commodity prices. The disinflation process of core items, however, is continuing. Given the sluggish recovery in economic activity, the annual core inflation rate fell to a record low of 0.8% in February 2010. The latest forecasts predict that there will be no risks to price stability until the end of 2011. Especially thanks to a slight recovery in international demand, the Central, Eastern and Southeastern (CESEE) EU Member States entered a period of economic stabilization in the second half of 2009, recording – once again – moderately positive average growth rates (on a quarterly basis). However, cyclical developments still vary significantly across the countries of the region. The economic downturn caused current account balances to improve throughout the entire region and brought down inflation rates in several countries. After undergoing the deepest and longest recession in post-war history, Austria registered moderate economic growth in the second half of 2009, supported by the revival of international economic activity, the Austrian government stimulus packages and the inventory cycle. According to recent results of the short-term economic indicator of the Oesterreichische Nationalbank (OeNB), growth is set to remain stable. Real GDP is expected to grow by 0.5% in both the first and the second quarters of 2010 (seasonally and working day adjusted, quarter on quarter). For the entire year 2010 the OeNB expects a real GDP growth rate of about 1½%.

Suggested Citation

  • Anna Orthofer & Josef Schreiner & Klaus Vondra, 2010. "Recovery of the Global Economy in the Second Half of 2009," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 6-25.
  • Handle: RePEc:onb:oenbmp:y:2010:i:1:b:1

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    References listed on IDEAS

    1. Paul G. J. O'Connell & Shang-Jin Wei, 1997. ""The Bigger They Are, The Harder They Fall": How Price Differences Across U.S. Cities Are Arbitraged," NBER Working Papers 6089, National Bureau of Economic Research, Inc.
    2. Kilian, Lutz & Taylor, Mark P., 2003. "Why is it so difficult to beat the random walk forecast of exchange rates?," Journal of International Economics, Elsevier, vol. 60(1), pages 85-107, May.
    3. Jesús Crespo Cuaresma & Jaroslava Hlouskova, 2005. "Beating the random walk in Central and Eastern Europe," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 24(3), pages 189-201.
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    More about this item


    global outlook; euro area; central and (south-)eastern Europe; Austria;

    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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