International Economic Indicators

Question 1: How is the United States doing in the most recent quarter compared to Japan, the Euro Area and Canada in terms of production and employment? How was the United States doing compared to those countries a year ago?

In terms of overall employment, the United States is faced with a sharp decline, losing more jobs and laying more employees as compared to Canada, Japan and the Euro Area. In stark comparison, although Canada is facing the tremors in wake of the current financial crisis, it is showing some signs of life as employment is decreasing at a slower pace, with reference to its neighbor which is facing crisis due to the failure of policies, high trade deficits, increased raw material costs, and loss of interest by investors, domestic and foreign in investing in the economy. Japan is also feeling the temperature due to the global turmoil however, the effects are relatively slow. Conditions in the Euro Area are not good as well however; the effects of the financial crisis have slowed down, in part due to interventions by the central banking and financial institutions to revive the economy. Production-wise, Canada has been the most successful economy, while all the rest are on a decline with United States being the sharpest, Japan and Euro Area relatively declining slowly.

Employment wise, 2007 was the year of decline for the United States, while Canada and Japan showed an increase, and the Euro Area remained somewhat unchanged. In terms of production in 2007, the United States and Japan’s economy were less susceptible to crisis, with increased production as compared to Canada and the Euro Area.

Question 2: Based on the data rank the four countries with respect to inflation. How does the United States compare to the three countries in 2005? What is the unemployment rate in each country in the most recent quarter?

With respect to inflation, these four countries would be ranked as follows (from lowest to highest):

1.      Japan

2.      Euro Area

3.      Canada

4.      United States

Comparatively, in 2005, commodity prices were on an increase in the United States, increasing at a low pace in Canada, declining in Japan and slow in the Euro Area.

Unemployment in US remained at 5.95% in the third quarter of 2008, with Canada 6.10%, Japan 4.05% and the Euro Area 7.50%.  United States recorded a high change in unemployment, followed by the Euro Area, Japan and Canada.

Question 3: After reviewing the recent economic indicators for these countries, what is your assessment of the strength of each economy at the present time?

At present, the economies of Canada and the Euro Area, although slowed down, are affected less as compared to other nations in the world economy. The world growth has slowed down to 3½ per cent in 2008 and is expected to slow down even more in 2009. Central financial and banking institutions in the United States are injecting large sums of capital to revive the economy, especially the automotive industry, as well as encouraging external investors by offering new securities, and newer insurance terms providing unlimited coverage on their investments, to encourage the flow of capital in the economy.

Canada and Euro Area are still holding the barriers due to relatively stable policy structure and its governance, including relatively less reliance on external borrowings.

For Japan, its major strength is in its cost per labor and production capabilities and methods however, to effectively handle the pressure and play low to the current economic crisis, it would have to concentrate efforts towards exporting to other developed economies as well.

Question 4: What is your prediction about the economic health of each economy over the next few years?

The United States’ economy is surely the only economy in the eye of the storm as it is the most developed economy of the world. Other countries such as Japan, Euro Area and Canada are likely to be affected by the economic debacle faced by the US, partly due to the world economy’s dependency and use of the Bretton Woods II system, have dollar as the sole currency for the entire world economy that has badly failed and is likely to crumble down and requiring immediate change by mid 2009 (Global Research Canada). Canada, Euro Area and Japan will have to be subservient to their own financial and banking institutions to stimulate the economy through high amounts of investment, paying off to employees who have lost their jobs, and most important, relying on borrowings from internal investors. The Economist predicts that Europe will face the most challenging circumstances in the shape of a crumbling financial system in 2009 however; most economists and policy makers suggest that the most effective way to deal with this issue is to:

1.      Change the current global monetary system

2.      Deregulate and then devise and regulate new policies governing the financial conditions of each economy

3.      Improve integration between economies through the use of breakthrough technology

4.      Decrease fear and protectionism (HM Treasury UK) in businesses by encouraging that these would indeed be contributing in reducing the poverty, in wake of reaching the overall Millennium Development Goals.

Japan will be required to shift its exports to other growing economies, relying less on US, rather increasing its exports to emerging market economies as well as the Euro Area.

Works Cited
Global Research Canada. Breakdown of the Global Monetary System by Summer 2009. 2 December 2008. 30 January 2009 <http://www.globalresearch.ca/index.php?context=va&aid=11267>.

HM Treasury UK. Managing the global economy through turbulent times. Surrey: Crown Publishers, 2008.