While the first real economic shocks originated in the U.S., the idea that Europe might suffer less economically than America, or get off lightly from this global downturn continues to simply remain an unrealistic notion. According to The NYT, some private economists are predicting that the U.S. economy will resume growth in Q4’09, while Europe is expected to persist in recession well into 2010.
NY Times: [Europe's economy contracted] an estimated 4.2 percent this year compared with an expected 2.8 percent decline in the United States.
“The shock originated in the U.S., but Europe is paying a higher price,” said Jean Pisani-Ferry, a former top financial adviser to the French government who is now director of Bruegel, a research center in Brussels.
Almost from the beginning of the crisis, the United States and Europe chose largely different paths to aiding their economies.
“I think America is further ahead in terms of fixing problems with the banks,” said Mr. Pisani-Ferry, “and countries like Germany have been hurt tremendously by the decline in world trade.”
Figures released this week showed that German exports plunged 28.7 percent in April from a year earlier, the steepest drop since the government began keeping records in 1950.
Underscoring the risk that hopes for a quick turnaround anywhere may be premature, the World Bank said Thursday that it expected the global economy to shrink by nearly 3 percent in 2009, far deeper than the 1.7 percent contraction it predicted just over two months ago.
And both Europe and the United States face the specter of rapidly rising unemployment, even if a rebound is beginning.