Global stagnation
Global stagnation is generally considered in late 2011 to be a possible short-term prospect, involving a large part of the world economy. Of 30 countries surveyed by the International Monetary Fund, the growth rates of the economies of 20 were classified as "below trend and moderating", 8 as "below trend and rising", and 2 as "above trend"[1]. The general slowdown of economic growth that occurred in 2011, following the strong growth of 2010, is thought to be attributable to a range of factors, including:
(a) the completion of the stockbuilding phase of the inventory cycle that normally follows a recession;
(b) the economic shock caused by the Japanese tsunami of March 2011;
(c) the loss of output due to the continuing deleveraging by banks and the consequent restriction of credit to companies;
(d) the effect on demand of continuing deleveraging by companies and households;
(e) the effect on demand of the reductions in public expenditure and the other fiscal adjustments in the fiscal aftermath of the Great Recession;
(f) the eurozone crisis and the fear of a European banking crisis resulting from the expected restructuring of the Greek government's debt;
(g) the fear of a global financial crisis resulting from contagion from the Greek crisis leading to a sovereign default by one of the larger PIIGS countries.