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sxc.hu
When do you R-eckon?
Thu, 04 Jun 2009 12:00
No one could say for sure when the recession in advanced markets
and the collapse of growth in emerging markets would end, a US
economist told a SA Reserve Bank (SARB) meeting on Thursday.
"When will it end? ... Nobody knows, but we know what to look
for," said Professor Dominick Salvatore of Fordham University in
New York.
He was speaking at a monetary policy committee strategic
planning session hosted by SARB Governor Tito Mboweni in
Magoebaskloof in Limpopo.
Salvatore said among the effects of the global economic crisis
was a "deep recession" in advanced markets such as the US and
Europe and a collapse of growth in emerging markets which included
South Africa.
The first factor to look for in trying to ascertain whether the
tide was turning was housing prices.
"On housing, we are not yet through the trend of prices falling
? we are not yet at the bottom of the recession on this."
The second factor to look out for was when banks no longer
needed to be recapitalised.
Salvatore said there were signs that banks were "almost there".
The third key indicator was when stock markets showed themselves
to be consistently back on an upward path.
On this third factor, Salvatore said, "they are signalling
anticipating the end of the recession ... that we are about or
nearly at the bottom".
Salvatore emphasised that although there were many expert
conflicting views and experts changing their views, some studies
indicated that in the US the recession should bottom out in the
third quarter of this year and in the fourth quarter of 2009 year
in Europe.
The effects of the recession in advanced markets had arrived in
South Africa ? an emerging market ? later on.
This was partly as a result of a drop in the demand for imports
from emerging economies by the advanced countries.