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Nouriel Roubini addressed the Digger and Dealers Mining Forum in Australia on Monday the 10thb of August. In Roubini’s remarks, he predicted the global economy would contract by 2% in 2009, staying in a recession until the end of the year, but would grow by 2% to 3% next year. There’s a risk of relapse, of a double-dip recession in the second half of next year,” Roubini said, tipping U.S. house prices to contract another 13% next year, on top of a drop in prices of 27% since their highs in 2006.
With the U.S. is still the world’s largest economy by far. Consumption trends will be key for the global recovery, and signs from labor markets and the outlook for consumer demand remained worrying, he said.
He said he expects U.S. unemployment to rise even further to reach 11% next year. Unemployment had reached 9.5% in June, while the labor market continued to show signs of severe weakness. The U.S. consumer would remain shopped out and keen to increase the rate of household savings.
U.K. unemployment rose to the highest level in 14 years as companies continue to cut jobs even as the worst recession in at least a generation begins to ease. Overall unemployment, as measured by International Labor Organization standards, rose to 7.8 percent between April and June, the most since 1996. That compares with 9.4 percent in the U.S. in July, 9.4 percent in the Euro region in June and 5.4 percent in Japan.
The employment rate fell to 72.7 percent from 73.6 percent, matching the biggest quarterly drop since 1971. The weaker job market is keeping a lid on pay. Average earnings excluding bonuses grew an annual 2.5 percent, the least since records began in 2001.
Business Secretary Peter Mandelson said the Treasury estimates that there would have been “far in excess of 500,000 more jobs lost in the recession had it not been for the government and the Bank of England’s intervention.”
The Bank of England last week added 50 billion pounds ($82 billion) to its asset-purchase plan, taking it beyond the previous limit granted by the Treasury. The bank has now pledged to pump as much as 175 billion pounds into the economy, equivalent to 12 percent of GDP.
The economy has shrunk 5.7 percent over the past five quarters, putting Britain on course for its worst slump since World War II. GDP contracted 6 percent over seven quarters in the recession that began in 1979.
Prime Minister Stephen Harper and Panamanian president Ricardo Martinelli signed a free trade agreement in Panama City on Tuesday, the eighth such deal Canada has signed in the last year.
The agreement will remove tariffs on 90% of goods imported from Canada, with the remaining ones to be phased out over the next decade, Harper’s office said in a statement. Canada exported C$128 million ($118 million) of goods such as meat, forest products and flight simulators to Panama in 2008, up 48 percent from 2007, according to the statement.
With Panama's economy red hot it grew 9.2 percent in 2008, the country is a lucrative market for Canadian goods and services.
Panama's economic boom stems largely from banking, shipping and services related to the transport sector. The expansion of the Panama Canal is a key element of the economic growth forecast for the country over the coming years.
Canada exported six times more merchandise than it imported from Panama in 2008, a total of $128 million, which represents a 48 percent increase from the previous year.
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