Socialist Worker

Do growth figures herald an economic recovery?

by Simon Basketter
Issue No. 2165

Recent figures showing Japan, Hong Kong, France and Germany creeping out of the recession have been hailed in some quarters as heralding the end of the global economic crisis.

But the small growth figures are based mostly on a collapse of imports in France and Germany, combined with a smaller collapse of exports meaning that more money went into these economies than went out. So their national income went up.

Another reason for the limited improvement in some of the figures was that the collapse of some manufacturing sectors had been so severe that it dried up production in some sectors.

That meant that stockpiles were being emptied and some companies are now rushing to refill the gap, increasing production.

The Japanese government has dished out a great deal of money to cushion the crisis by rescuing banks and companies. So public investment rose by 8.1 percent in the last three months.

But increasing growth figures don’t automatically mean that ordinary people benefit. In the same period wages fell 1.7 percent and unemployment in Japan is at a six year high.

In Europe, the effect of the car scrappage scheme to stimulate sales of new cars has probably been over-estimated. But in any case, people can’t buy a new car every six months.

In both Japan and Germany some rescue measures were brought in precisely to cover the run up to those countries’ elections.

The direct cash scheme for Japanese residents and the employment subsidies to German bosses both run out in the autumn.

In France the jobless figure is set to top 10 percent by the end of the year. German unemployment is to rise another million to 4.5 million by the end of the year.

And in Britain the economy shrank 0.8 percent over the past three months.

Mervyn King, the governor of the Bank of England, warned last week that the recession in Britain “appears to have been deeper than previously thought”.

That was at the point that the Bank of England gave another £50 billion to the banks.

The bailouts may have helped some countries massage their growth figures. But, like here, they have really made the bosses richer while we are still under attack.

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Tue 18 Aug 2009, 17:47 BST
Issue No. 2165
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