The global economy has reached a critical juncture, and is facing the arduous task of overcoming major difficulties standing in the way of recovering and ensuring steady growth. Europes debt crisis has festered for more than three years now. Analysts said Europes sovereign debt crisis, high commodity prices, the legacy of the financial collapse and tension between the worlds three biggest economies had soured the economic environment since the start of 2012, according to the editorial of the current ICCB News Bulletin of International Chamber of Commerce-Bangladesh released today.

In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness. The scenario of a synchronized recession across the world loomed larger since the breaking news of shrinking in Chinas factory output as well as intensified recession in Europe and the weakest quarter performance of the US manufacturing sector. In addition lower GDP growth in a number of major emerging economies has further aggravated the situation.

According to IMF latest World Economic Outlook (WEO) projections, global growth will be 3.5 percent in 2012 and 3.9 percent in 2013, marginally lower than its April forecast. The World Trade Organization (WTO) has also warned about deteriorating global trade and has slashed its growth forecast from 3.7 to 2.5%, less than half of the previous 20-year average. According to WTO Director General Pascal Lamy, there is more risk of things getting worse than better.

Similarly, the Organization for Economic Co-operation and Development (OECD) predicted shrinking of UK economy by 0.7%, compared with its previous forecasts of 0.5% growth. Even though the US economy is expected to grow due to improvements in the housing market and some progress on tackling its debt : still, the OECD has reduced US growth forecast from 2.4% to 2.3%.

Meanwhile, a European Commission report showed eurozone consumer confidence falling for the fourth consecutive month in September to a 40-month low amid signs that activity across the 17-nation single currency zone is heading for a second quarter of decline. The ECs consumer confidence index sank to -25.9 in September from -24.6 in August.

On the other hand, Asia remained the brightest spot in the global economy but the global slowdown has been reflected in Asian exports, which JP Morgan calculates have fallen at a 15.7 percent annualized rate in the June-August period. Chinese growth slowed to a three-year low of 7.6 percent in the second quarter. A slowdown in Chinas economy is perceived as being the biggest risk to Asias economic growth, according to a survey of powerbrokers in the region. Further, the involvement of Japan in a territorial row with China over disputed islands will also affect the Asian economy.