The Banking and Strategy Initiative

Chillin' out till it needs to be funded / Global Economy raises hopes

Scattered signs of green shoots in the global economy are raising hopes that the recession could bottom out later this year, paving the way for economic recovery in 2010.

However, the signs remain tentative. Economists warn that recessions rarely proceed in straight lines and false dawns are common before recovery finally takes hold.

With the world economy in uncharted territory – in a synchronised downturn, with a badly damaged financial sector and need for large balance sheet adjustments at overstretched households – few experts have any confidence in their forecasts.

Friday’s news that the US economy lost 663,000 jobs in March is a reminder that the global economy remains in dire straits with considerable downward momentum.

However, it does appear that the rate of deterioration has slowed from the precipitous pace in late 2008, when the global economy looked to be diving off a cliff.

Surveys of business sentiment round the world, particularly in the manufacturing sector, suggest conditions are less bad than they were a few months ago although still bad by historical standards.

In the UK, for instance, Ben Broadbent, of Goldman Sachs, estimates that purchasing managers indices are now consistent with an annualised rate of decline of 3 per cent rather than 7 per cent in the fourth quarter of 2008.

via / Global Economy – Signs of green shoots raise hopes.


This entry was posted on April 3, 2009 by in Financial Markets and tagged , , , .


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