Last week, the International Monetary Fund said that the economic outlook for France, Germany, Italy and Spain was brightening. Eurostat, the statistics agency for the 19 countries that use the euro currency, forecast annual eurozone growth to hit 2.1% this year, the fastest pace in a decade. The unemployment rate in Spain, one of the nations hardest hit by the financial crisis, recently saw joblessness fall below 4 million for the first time in eight years.
In the United States, stocks are trading at record levels and July’s jobs report from the Labor Department showed a 16-year low unemployment rate of 4.3%. The Bank for International Settlements, which serves central banks, noted in June that the global economy’s “near-term prospects were the best in a long time.”
That June report also identified several risk factors that could threaten these improved prospects, including a rise in inflation, weaker consumption and investment, and increased trade protectionism.
The recovery is also uneven. In Greece, which is still struggling with crushing debts, unemployment is around 25%. Brazil’s economy contracted 3.6% last year and the country is stuck in its worst recession ever. According to former trader Stenfors, China has an enormous corporate debt load, and in Scandinavia, households are burdened by worrisome levels of consumer loans.
“Regulators have made a lot changes and beefed up their capabilities, central bankers have intervened with all these extraordinary measures, but the economies are not doing that great,” Stenfors said. “Unemployment and GDP in some countries is OK, but overall — if you look at the eurozone, for instance — it’s not been a nice ride the last few years.”