Azerbaijan, Baku, Aug. 17 / Trend , A.Badalova/
The global economy can overcome the recession at least in 5 years, Professor, President of the U.S. World Marketing research firm, Gene Aldridge believes.
"The recession, begun officially in 2007, would take at least five years to reach "normal levels" again," Aldridge wrote to Trend in an email.
The world economy cannot expect to see growth rates of 2.5%, 2%, 3.0%, and 3.9%, as it did in the years of 2000-2003 respectively, professor said. These early years were quite different because the world was living off the U.S. consumer spending spree created by the housing boom.
"Savings rates are up in the U.S. and this could mean overall less spending for many years to come," Aldridge said.
Unemployment worldwide is creating less demand in the consumer markets and can be expected to play heavily on the world economic outlook far into 2011, Aldridge believes.
Aldridge does not see a strong recovery coming for 2010, but rather a continuing challenge of policy issues about government spending, FDI and international trade playing on the unemployment exacerbation through 2012.
Aldridge agrees in general with the IMF (International Monetary Fund) projections of the world's shrinkage of about 1.3 percent or more for 2009.
These shrinkages are linked to Foreign Direct Investment flows and international trade which, up until 2007 were robust for even developing nations, Aldridge believes. Now the banks worldwide have gone underground with their money supply shrinking for small business and large business ventures, except some of those in China. Without this capital, businesses cannot employ people.
It is expected that the U.S. economy will shrink by 2.8 to 2.9 percent overall for 2009.
"President Obama's government is like a spending sailor out on a drunken stupor, Aldridge said. He will exacerbate the world economic conditions with inflation that may choke off potential future growth well into 2011-2012".
A high level of inflation may enhance a second wave of financial instability at the outset of the next decade into the 21st century, Aldridge believes .
"The evidence is in the financial communities around the world who understand what a high inflation rate could mean for the U.S. and the world economy," Aldridge said.
If inflation worldwide does create a new environment by 2010 or 2011, then the world may be in for a prolonged economic contraction never witnessed before, Aldridge believes.
In fact, both China and India deserve close attention since their own growth pattern in 2007-2009 time period has shown excellent resilience during the recession, professor believes.
"Since 1978, China has shown an openness in attracting FDI to be used for its labor force and quick processing turn around in exports. This flow has been disrupted by the worldwide economic slow down and shrinkages," Aldridge said.
Brazil has also shown resilience in the recession and is expected to have a 2.2 growth for 2010 even though there contraction for 2009 will be a negative 1.3 percent, he added.
Aldridge now believes that new economic development strategies are needed for emerging nations especially in Latin American and Africa. The FDI in high technology innovations like nanotechnology, hydrogen technology are the key targets now for emerging nations, professor believes.