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Stoil Topalov

Almost a year since the start of the credit crunch, the US property market showed signs of recovery with a sales gain of 4 % for the third month in a row. The news was quickly picked up by the stock markets and Dow Jones went over 9 000 points for the first time since the end of January, closing the week at 9093 points. In the meantime, the Standard and Poor 500 closed at record levels for this year. Following the growth of financial indices in the last two weeks, lead by the positive second-quarter corporate results, the winning streak for the fund markets continued for a third week in a row.

The rest of the world seems to be in line with Wall Street in the upward surge. DAX Frankfurt saw a gain of 2,5 %, while London’s FTSE rose 1.4%. The latest however is barely a consolation for Gordon Brown, who saw Britain’s GDP contract by almost 6% (5.6) in the year to June – the steepest decline since the current data series started in 1955. The Japanese Nikkei increased its value by 1.2% and closed on Friday at 9931 points. The Athens Stock Market also continued its growth, this time by 4%, to close the week at 2331.3 points.

However, IMF’s latest forecasts for the Greek economy caused a shock among interested parties. Economists at the fund predict that unemployment will reach 9.5%, while the country’s economy is expected to enter a two-year recession, which will see its GDP fall by 1.7% this year and 0.4% in 2010. Further predictions suggest that budget deficit will reach 6.2% of the country’s Gross Domestic Product in 2009 and 7.5% next year. To cover the deficit, government borrowing is expected to increase from 98% last year to 109 % for this year, while soaring to 116 % in 2010. Romania is the EU state with worse predictions, with its GDP expected to contract by 8% this year. IMF’s dire prognoses come just a week after the fund warned of the potential collapse of the country’s insurance system, caused by aging population. The situation is not thought to improve, following the grim predictions of a raise in unemployment.

The rest of the economic news – surge in the financial markets around the world was closely followed by a raise in the oil price. Petrol closed the week at $67.22 per barrel, following an eight day winning streak.