Economic Quarterly Report Dutch version
The recent global economic slowdown has made clear once again that the battered Western consumers, especially in the US and the UK, are no longer able to thrust the global economy forward while they are busy repairing their balance sheets.
The pace of economic recovery is slowing before the fiscal squeeze has kicked in. But the BoE is hesitant to launch QE2 given the higherthan expected inflation (expectations). There are definitely short-term upside risks to inflation, mostly due to the VAT hike in January 2011.
Investors are worried that rising public debt to GDP ratios in the advanced economies will eventually lead to a wave of sovereign defaults. To calm market nerves, therefore, governments have announced austerity measures to lower debt ratios to more ‘sustainable levels’.