Standard & Poor’s are likely to downgrade Greece’s ratings to “selective default” once the country has finalized its debt restructuring, however, that will not necessarily irreparably damage the credibility of the European Union officials with the ratings agency said on Tuesday.
“It’s not a given that Greece’s default would have a domino effect in the euro zone,” John Chambers, the chairman of S&P’s sovereign rating committee, said in an event organised by Blooomberg.
Europe’s debt crisis could finally tip the world economy into recession and a bigger firewall fund is urgently needed to keep the damage from spreading, the International Monetary Fund stated during its media conference on Tuesday.
The IMF has cut its estimate for 2012 global growth to 3.3 percent from 4 percent just three months ago and warned it could drop as low as 1.3 percent if Europe lets the crisis fester for much longer. For 2013, it predicted growth of 3.9 percent. Similar to the World Bank prediction the IMF suggest 0.5% contraction for Europe in 2012 with UK growth painted at 0.6%..
IMF chief economist Olivier Blanchard said at a news conference;
The epicentre of the danger is Europe but the rest of the world is increasingly affected. There is an even greater danger, namely that the European crisis intensifies, and in this case the world could be plunged into another recession. With the right set of measures, the worst can definitively be avoided and the recovery can be put back on track. These measures can be taken, need to be taken, and need to be taken urgently.
Global Employment Outlook
Progress in reducing the number of working poor had slowed markedly, according to the the International Labour Organisation, the ILO. Nearly 30% of workers were living with their families on less than $2 a day, up by 55m since the start of the crisis in 2008-2009.
The Global Employment Trends 2012 report said that 900m workers, mostly in developing countries, were living with their families on less than the $2-a-day global poverty line, half of them surviving below the $1.25-a-day extreme poverty line. The ILO urged policymakers to take steps to create better-paid jobs.
The global economy will need to create 600m jobs over the next decade to meet the “urgent challenge” of tackling the legacy of unemployment left by recession and to find work for those entering the labour force, according to the International Labour Organisation.
In its annual report on the state of the global jobs market, the ILO said that three years of “continuous crisis conditions” had left 200m people jobless. It estimates that a further 400m jobs, 40m a year, would be needed over the next decade to absorb growth in the international labour force.
Juan Somavía, the ILO’s director general.
Despite strenuous government efforts, the jobs crisis continues unabated, with one in three workers worldwide, or an estimated 900m people, either unemployed or living in poverty. What is needed is that job creation in the real economy must become our number-one priority.
These latest figures reflect the increasing inequality and continuous exclusion that millions of workers and their families are facing. Whether we recover or not from this crisis will depend on how effective government policies ultimately are. And policies will only be effective as long as they have a positive impact on people’s lives.
Stocks fell on Tuesday dragging U.S. and European benchmark indexes down from almost six-month highs due primarily to the fact that talks over Greece’s debt restructuring have reached a stalemate. The euro and leading commodities recovered from earlier declines.
The Standard & Poor’s 500 Index lost 0.1 percent to close at 1,314.65, halting its five-day rally, and the Dow Jones Industrial Average slid 33.07 points to 12,675.75. S&P 500 futures rose after normal trading hours, climbing 0.3 percent as of 4:44 p.m. in New York, following better-than-estimated results at Apple Inc. The euro recovered from early declines to increase 0.1 percent $1.3027, near its highest level of 2012. The S&P GSCI Index of commodities reversed early losses.
Crude oil for March delivery fell 63 cents to settle at $98.95 a barrel on the New York Mercantile Exchange. Prices are up 13 percent from a year earlier. Futures were little changed from the settlement after the American Petroleum Institute reported that crude oil inventories rose 7.33 million barrels to 337.4 million last week. March crude decreased 52 cents, or 0.5 percent, to $99.06 a barrel in electronic trading at 4:32 p.m. Brent oil for March settlement dropped 55 cents, or 0.5 percent, to end the session at $110.03 a barrel on the London- based ICE Futures Europe exchange.