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This article discusses the need for the U.K. government to "show some political backbone" by becoming more enterprise friendly in order to stimulate the badly required growth of their economy. U.K. business leaders have become increasingly concerned as the CBI has predicted that the U.K. economy will shrink by 0.3% this year. This fall in GDP is a sign that the country is entering a double-dip recession. The reason behind this is declining exports, the on-going euro crisis, a stagnant economy since the coalition, reduced borrowing on credit cards, an increase in unemployment and a lack of household spending. A reduced borrowing on credit cards and lack of household spending directly affects GDP as GDP can be calculated using the expenditure method, where household consumption is one of the factors taken into consideration. If consumption falls, so does GDP. In order to prevent the GDP from falling further and to promote economic growth, schemes such as tax breaks for small firms taking on extra workers ,schemes that boost the mortgage and household market and schemes that support household expenditure have been implemented. This could lead to a rise in employment as well as expenditures, causing GDP to grow. 

This article mentions exports in correlation to a country's GDP - more specifically, Russia's GDP. As one of the world's largest energy suppliers, a lot of Russia's GDP is made up of the amount of exports of their energy goods. As the article says, when oil prices went down in 2009, Russia's GDP decreased dramatically, by about 8%, and when oil prices increased again it rose by 4.2%. Such a high amount of exports suggest high independance. Russia does not rely on other countries to sustain its energy consumption. Also, Russia makes a lot of money from these exports - all of which are injections into the economy. Russian citizens buy the oil because it will likely be cheaper in Russia, as there is so much of it - and the cost of exporting has not yet been included, either. As well as this, foreigners will buy it because they have little other choice. This gives Russia a lot of market power. 

This article talks about how South Korea's inflation is at its lowest in 12 years at 1.2 per cent. This has both positive and negative effects. It is positive because price level is only slightly increasing, which is good for consumers withing South Korea. However it also has many negative effects. Because inflation is so low employment and real GDP will only be slightly increasing, these are elements that are good for the economy when they increase. One of the main reasons why the inflation is so low is because exports, a key section of the country's economy, have decreased. If exports continue to decrease then this could result in a decrease of GDP in the country which is not good for people living in the country and the country's economy. However, the article says that it is unlikely that South Korea will experience deflation and that this is likely the trough for inflation, meaning inflation is due to increase.

This article explains how the Swiss economy continued to grow despite the predictions that it would shrink or go into a recession. Economists thought this, because the franc became a strong currency, making Switzerland's imports cheaper but making it very expensive for other countries to buy goods from Switzerland, meaning fewer exports for Switzerland. Since we know that GDP can be calculated by adding the incomes produced by C (Consumers) + I (Investments) + G (Government) + X (Exports - Imports), we will see that Switzerland's GDP would decrease because less exports or more exports would make 'X' a negative value lowering the nations GDP. However, Switzerland's GDP went different as expected. Even though exports were now more costly for other countries, Switzerland exports grew by 2.8 % in the last quarter of the year, in precious metals, jewels or arts. Adding on to that, the gross fixed investments also grew by 2.5 % in investments in construction and equipment as the strong currency proved a "safe-haven" for investor. The rise in exports and investments lead to an unexpected and unpredicted expansion of the Swiss economy instead of a recession.

Brazil's President Dilm Rousseff a 66 billion dollar stimulus plan to revive the country road and transport systems in order to bolster the economy. The government predicts a growth of 3% in 2012, down from the 4.5% growth in 2011. In order to maintain the GDP growth at what it was the previous year the government plans to invest 66 billion dollars into the country transport system in order to promote jobs and growth within the country. As this is not a transfer payment (tax revenue redistributed to pensioners, veteran, and the unemployed) the government is contributing to the economies gross domestic product. This stimulus plan would go to wages of the people working on the transport system and the purchase of capital goods necessary to make the improvements. In order to maintain the GDP per capita in Brazil it is necessary for the economy to grow at the same rate as the population.

At the moment globally there has been a spike in food prices. One of the causes has been the severe droughts in the United states which have driven up the food prices. In response to this inflation the government of Brazil decided to reduce taxes on basic household goods to support an economic recovery. This action also leads to stabler prices, which is one of the macro-economic goals of a country. The tax break on household goods allows for a increase in consumption as consumers will feel wealthier and have an increase in purchasing power. As a result this will increase Brazil's GDP to a certain extent as Consumption is one of the factors that influence the gross national product. 

This is a classic example of cost-push inflation. The supply costs are increasing (in this case the workers wages) which means that SRAS shifts to the left, as less is being is being supplied. Firms hire less workers or produce less because of the high costs. As a result, price levels rise, unemployment levels rise and the real gross domestic product falls. This is also obvious because, if workers go on strike as mentioned in the article, then they are producing less goods, meaning that GDP obviously decreases. This could turn into an inflationary spiral. This spiral is because, when wages are increased for purposes such as to pay or rent or everyday goods, the firms also demand higher prices, which causes those who buy from them to charge more too. This is what causes the cycle to begin. Otherwise it could get to a point where currency becomes worthless.

The article discusses that the US may face a fiscal cliff in order to reduce the large deficit that has accumulated in the past. A fiscal policy stands for a series of major tax increases and government spending cuts if Congress does not act. The article discusses that through lower government spending and higher taxes it is expected that $600 billion can be extracted from the economy to decrease the debt. However economists think that every dollar of deficit reduction will subtract the same or a greater amount from economic growth. In theoretical terms this would make sense. If government spending decrease this reduces aggregate demand in the economy and by that will cause a decrease in real GDP. Households will cut back on purchases and especially households that are dependent on government support through unemployment benefits will suffer from the policy. Although this will decrease the deficit of the US it may be that it distracts the fragile recovering economy. 

The National Institute of Economic and Social Research has advised the UK government to ease its fiscal policy because of the danger of the economy entering another recession. The UK fiscal policy is unintentionally causing deficient demand. Demand was already relatively low as private and public sectors were focusing on paying off their debts. This decline in demand has lead to a decrease in consumption and a fall in GDP. Also, businesses have become reluctant to invest due to the uncertainty about domestic and foreign demand. The UK government has been cautious about easing their fiscal policy because of their desire to achieve their fiscal goals, which they have been relatively successful in reaching so far, as stated by a Treasury spokesman who said: "… the government's commitment to deficit reduction has helped maintain market confidence". A way for the UK to ease their fiscal policy and subsequently increase demand would be to cut taxes, which would allow households to have a higher level of disposable income and firms would be incentivized to invest more because of the rising domestic demand.  

The Portuguese government has revealed the details of its draft budget for 2013. It is said to be one of the harshest in the country's recent history.  The Portuguese government has spent a significantly greater amount than the total revenue, and is therefore experiencing a budget deficit. Due to this deficit, government is forced to borrow money from the public, thus increasing its budget deficit even further, and ultimately increasing their total national debt.  The government was already granted a 78 billion- euro bailout last year, which has still not accounted for their budget deficit. Therefore, the Portuguese government was forced to make some huge changes in the economy,.  As stated in the article, the government will have to borrow money from the public through average income taxes, which will increase from 9.8% to 13.2%. Furthermore, they will have to cut spending worth up to 2.7 billion euros next year, which includes laying off 2% of the countries 600.000 public sector employees.  Moreover, the Portuguese government has decided to cut their spending by not raising social security contribution next year from 11% to 18%.  According to Vitor Gaspar,finance minister, this budget would allow Portugal to reduce its budget deficit to 4.5% in 2013.  Ultimately hoping to achieve the European Union target of 3% of GDP. 

Currently the economic growth forecast of South Africa isn't looking as promising as thought, while  additionally its budget deficit is going to be higher than promised. 4.8 percent of GDP instead of 4.6 percent. According to the president, Gordhan, this is due to slower economic growth and not due to increase in government spending. He emphasizes that there will be no increase in government spending. From a neoclassical side this is a good thing as an increase in spending accompanied by a decrease in taxes will only further increase the governments budget deficit. The mining strikes ongoing in South Africa have had two significant consequences. 1. more people have become unemployed due to the strikes for higher wages.2. Offshore investors are worried that the government will increase spending to ease the social tensions. As a result both decreases AD as there is less consumption and investment. 

Data shows that contraction in the UK has not dropped by as much as it was expected to, so could this mean that they are reaching a trough and the recession is coming to an end? Inflation is down and unemployment is falling, although the productive capacity of the economy has been affected because of a shift to part-time work. The UK  has had a flat economy over the past two years, so the lower than expected changes in GDP do not change that it is in a recession. 

coming soon. 

India's investors and some politicians want the Reserve Bank of India (RBI) to lower its interest rates so that more firms could invest in capital goods in the country. This would increase investment, which in turn would shift aggregate demand to the right and lead to GDP growth. RBI however argues that lowering the interest rates could cause inflation to go up, which in turn would have a great effect on India's lower class citizens. The RBI also argues that interest rates are not very high at the moment, and blame the lack of investment in 'bad governance and lack of reforms'. If the RBI lowered the interest rates and investment did not increase much as they argue, while inflation goes up, many poor people would suffer in the process as they wouldn't be able to buy as many essential goods such as food. This would cause a movement along the aggregate demand curve as price level goes up. On the other hand, from an investor's perspective this would be the best way to generate economic growth, which would benefit the country as a whole if it led to more investment on capital goods.

Investors in India are asking the Reserve Bank of India (RBI) for lower interest rates, so that more can be invested in order to accelerate the country's growth rate (which has been decelerating). However, the RBI is concerned that this could lead to an increase in inflation (which is already high) as AD would increase, causing the country to produce beyond its full level of employment, meaning that price levels would raise more than RGDP proportionally (demand pull inflation). The RBI believes that people are more concerned with inflation as it causes the price of food to go up, affecting poor families. However, there is a possibility that growth is of more importance to Indians when looking at the country's economic performance. Other factors such as an increase in oil prices and a poor-monsoon could drive food prices even higher. As result the Indian RBI must be very cautious whether it will be worth lowering interest rates.

This article talks about the rise in the unemployment rate in France. Unemployment occurs when someone of working age who is willing and able to work and is looking for work is unable to find a job. The unemployment rate is that percentage of the total labor force in a country that is in this situation. This article states that unemployment in France has reached a 13-year high at 10.2%. There have been 3 consecutive quarters of zero growth. Youth unemployment has also risen with the unemployment rate amongst 15 to 24 year-olds now 22.7%. One of the possible solutions for the situation is to wait until the market fixes itself. Pressure on prices of factors of production is decreased due to the smaller number of workers present. Eventually, firms should start buying more factors of production, increasing the country's Real GDP. Since output will then have been increased, more workers will be needed and employment should rise. However, several large French companies have recently announced plans to lay off more workers. This shows that the natural process of getting output back to where it was before the recession is not occurring. France's government has therefore offered a solution: launching a scheme to create 150,000 state-subsidized jobs for young people.