Recession waning: France, Germany, Singapore, Hong Kong, Japan …

The last few days have seen data which suggest that the economies of France, Germany, Hong Kong, Singapore and Japan have bottomed out; that is they showed positive GDP changes in the second quarter (April – June) 2009.

Some of the numbers are a bit extraordinary – Singapore’s data shows growth of 20% in 2Q. This is more volatility than stability. But it is evident that generally conditions are improving. Asia has been bolstered by its moreattractive fundamentals, France never had the same kind of credit balloon that the US or UK had. Germany has a more interdependent economic structure because of shared interests by owners, managers and employees.

Economic stimulus has certainly been a factor in the recovery of these economies. But it is far from certain whether or not the improvement can be maintained.

Improvement in stock markets and these GDP numbers suggest that the economic difficulties have bottomed out. However, I think it would be a mistake to assume that previous levels will be attained soon. There remains tremendous weakness in the financial system because it has been flooded with new money. Worse though is the lack of behavioural change in regulators, policy makers or fiduciaries so that the costs of moral hazard remain.

It is no great surprise that the winners are those with assets and income and the losers are people with fewer resources and less education.

The summer is always unpredictable because of the holiday season – a month off for politicians and many bankers and industrialists holidaying too. September is likely to see a positive swing but it is not certain that momentum will be maintained through to winter. Stock markets have regained much of their value since last September.

BBC: France and Germany exit recession

BBC: Hong Kong emerges from recession

BBC: Japan’s economy leaves recession

Also see: Stabilisation is uneven and recovery will likely be sluggish.

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