QUARTERLY ANALYSIS: The Progress of Monetary, Banking and Payment System Quarter 2, 2009

Abstract

Developments in the global economy suggest a gathering momentum in the recovery
process, although still daunted by risks. process, although still daunted by risks. In developed nations, various indicators of macroeconomic recovery have shown an improving trend. Government-sponsored stimulus packages and financial sector stabilisation programmes have successfully bolstered public confidence, and in turn strengthened consumption. Conditions on credit markets have also begun to improve in an added development encouraging greater private consumption. Despite this, stubbornly high levels of unemployment pose risks daunting the economic recovery process in these nations. On the other hand, economic recovery is gaining momentum in emerging market countries, led by China, India and Korea. Investment activity in China, under way since the beginning of the year, is supported by a fiscal stimulus through infrastructure spending and brisk credit expansion Resurgent domestic demand in these Asian economies has stimulated improved economic performance in other countries in the region. Despite this, the economic improvement in some emerging market countries is not yet regarded sufficient to compensate for the slowdown in advanced economies. In response to these developments, further contraction is predicted in the global economy, although at a lesser pace.