TPT July 2010

G lobal M arketplace

American productivity was still growing in the first quarter, though more slowly than in the last nine months of 2009. The narrower 3.6% rise in productivity for the first three months of this year was a welcome indication that companies in the US are approaching the limit of how much they can expand output without hiring more workers. Analysts consider this the crucial turning-point for a sustained recovery. A rebound in hiring would prompt an increase in consumer spending, which accounts for 70% of economic activity in the United States. Matters of money The World Bank awards a greater say to China, acknowledging its rapidly growing influence on the global economy The 186 members of the World Bank have decided to increase China’s voting power from 2.77% to 4.42%. This is still well behind the voting strength of the United States, whose 15.85% share gives it effective veto power, and also short of Japan’s 6.84%. But the boost does confirm the Chinese seat as No. 3 on the bank, and signalises recognition by the international lending body of China’s stature in the world economy. The enhancement of China’s voting rights also reflects a broader World Bank decision to raise the share of votes held by developing countries to just over 47%, giving those countries a greater say in setting the agenda. The bank requires an 85% affirmative vote to implement any new policy.

The Canadian recession of 2009 roughly paralleled that of the US. Real gross domestic product (GDP) contracted by 3.9%, compared to 3.8% in the US, and industrial production declined 16.4% against a 14.3% US fall – the discrepancy there attributable to a more severe downturn in Canada’s automotive sector. However, according to Oxford Analytica, despite concerns about persistent unemployment and the risk of exchange-rate appreciation of the currency, the Canadian economic rebound seems set to be stronger than the American. A broad-based Canadian upturn this year is expected to include: › An increase of 2.7% in consumer spending, up from 0.2% last year; › A rise of 6.4% in private fixed investment, after a 14.1% contraction in 2009; › A jump in exports of at least 7% after last year’s 14% tumble, despite a strong Canadian dollar; › As a result of the recovery in exports, a reduction in the current account deficit to C$15 billion (US$14.6 billion) this year and C$9 billion next year – “a vast improvement,” Oxford Analytica notes, on the $41 billion Canadian shortfall of 2009; and, › A dip in the unemployment rate to 7.8% this year and 7.2% next year, from 8.3% in 2009. Even as it is outpaced by Canada, the US has seen its economy grow since last summer. The Labor Department reported on 6 May that

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J uly 2010

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