Global economy is in the worst shape since ’09

Associated Press

WASHINGTON

The global economy is in the worst shape since the dark days of 2009.

Six of the 17 countries that use the euro currency are in recession. The U.S. economy is struggling again. And the economic superstars of the developing world — China, India and Brazil — are in no position to help.

The lengthening shadow over the world’s economy illustrates one of the consequences of globalization: There’s nowhere to hide.

Economies around the world have never been so tightly linked — which means that as one region weakens, others do, too.

As a result of this global economic slowdown, the International Monetary Fund has reduced its forecast for world growth this year to 3.5 percent, the slowest since a 0.6 percent drop in 2009. Some economists predict the global economy will grow a full percentage point less.

Few foresee another global recession. Central banks in China, Britain, Brazil, South Korea and Europe have cut interest rates in the past month to try to jolt growth. European leaders have begun to focus more on promoting growth, not just shrinking debt and cutting budgets.

The Chinese government, in particular, is expected to do what it takes to protect its economy from deteriorating too quickly. And despite their slowdowns, China and India still are growing at rates America and Europe can only imagine.

But many economists say European policymakers aren’t moving fast enough to strengthen European banks and ease borrowing costs for Italy and Spain. They fear the global impact if Europe’s economy deteriorates further.

Stock prices in the U.S. and elsewhere are fluctuating almost daily depending on the outlook for a resolution of Europe’s debt crisis.

Around the world, sales at companies ranging from automakers to technology companies are falling. Advanced Micro Devices, a California-based maker of computer chips used in everything from slot machines to smart cameras, says revenue likely dropped 11 percent in the second quarter because of weaker-than-expected sales in China and Europe.

One growing concern about the global economy is there’s little margin for error: Unemployment is already at recession levels in Europe and the U.S.

The U.S., by far the world’s biggest economy, has long pulled the global economy out of slumps. Now it needs help. Three years after the Great Recession officially ended, the American economy can’t maintain momentum. For the third-straight year, growth has stalled at mid-year after getting off to a promising start.

Unemployment stood at 8.2 percent in June — the 41st-straight month it’s been above 8 percent.

Europe’s obstacles are more severe. It’s faced with government debts, struggling banks and scant economic growth.