Economics Weekly by Lloyds TSB

In all of the furore surrounding the sovereign debt crisis in Europe and the impact on the euro and US dollar, attention has drifted from some recent developments in monetary data that suggest all is not well with the global economy. Falling money supply suggest global recovery not secure

In all of the furore surrounding the sovereign debt crisis in Europe and the impact on the euro and US dollar, attention has drifted from some recent developments in monetary data that suggest all is not well with the global economy. In summary, broad monetary data are suggesting that the world economy is operating at two speeds. In the developed economies, money supply data suggest that the economic recovery, though underway, is not secure and growth is slow, see chart a. By contrast, money supply for some key emerging market economies suggests that the economic recovery is robust and growth is fast, see chart b. However, this may be a misleading conclusion to draw, as should the developed economies falter, there will be significant negative trade implications for growth in the emerging market economies as well.