downturn

The global economic growth remains vulnerable to sovereign debt risks and a second downturn, warned Chinese Premier Minister Wen Jiabao on Monday and underlined that his own country remain on track.

Wen said that it is still early for the nations to consider exiting their stimulus spending.

"All countries must coordinate together and strengthen support to the economy. There cannot be the least relaxation," he told a meeting with Japanese business leaders in Tokyo.

White House economic adviser Larry Summers said that the US economy is about to come to self-sustaining growth while the employment outlook remains uncertain.

According to the head of the International Monetary Fund Dominique Strauss-Kahn developed countries may slow down again if they exit stimulus support too early. Strauss-Kahn underlined that recovery in private demand and employment are necessary conditions for governments to begin exiting policies designed to support their economies.

"Recovery in advanced economies has been sluggish," he said.

"We have to be cautious because the recovery has been fragile."

According to the World Bank report published in Wednesday's Financial Times, swift interest rate hikes targeted at containing inflation in product and asset prices could lead to another recession in US and European countries, economies of which are recovering slowly. 

 It seems the financial crisis isn't all doom and gloom: one in four people are glad the world's economy slumped like it did, because it helped them realize their priorities in life, according to a global survey.

Market research firm Synovate polled around 11,400 people across the world and found more than half had permanently changed their attitudes toward money over the last 12 months.

Another 47 percent, however, said they were looking forward to being able to spend freely again.

 While the financial crisis has an adverse impact on the largest retailers in the United States smaller merchants that occupy the second hand market niche are reportedly flourishing as many Americans are seeking to save their money and thus avail themselves of available bargains.

As Michael Geoghegan, HSBC Chief Executive, said in an interview with the Financial Times, he is wary about "growing too fast" as he fears a second economic downturn could force the bank to make write-downs.

Geoghegan has a firm belief economic recovery would look like W-shaped rather than V-shaped.

 So, he’s sure "we have to be very careful we don't grow the balance sheet so far before the recovery has come, only to write it back into the impairment line later on. I'm cautious about growing too fast."

U.S. President Barack Obama said during his first White House news conference that the government has can fix the economy.

Obama offered to use the ideas proposed by Treasury Secretary Timothy Geithner on administration of the remaining $350 billion from the rescue fund for the financial system. However, he noted that solving the problem is not only government's responsibility.