Regional Macro Pulse: Green shoots or false spring?

A renewed sense of guareded optimism seems to have emerged in recent weeks amid uncertainty over the depth and duration of the current global financial and economic crisis.  As the financial markets normally lead the real economy by at least six months, the global stock markets have begun moving up in anticipation of a recovery given the tentative signs of green shoors for the US and China economies.  There are growing signs that the financial and economic data appear to move in a direction consistent with where markets have just gone.  In our opinion, global growth should be stronger in 2010 relative to 2009, aided by the extremely low base.  Nevertheless, the growth trajectory will probably fall short of its long-run average of 3.7%.  The pace and nature of the global economic recovery will depend on:-
(i) the speedy restructuring of the banking sector, including the cleansing of banks' toxic assets;
(ii) the normalisation of credit markets and the resumption of bank lending; and
(iii) the stabilisation of US house prices. 

A double-dip or "W" recovery is probable if the US experiences a recovery that is too rapid, fuelling expectations of a return to inflation and thereby adding to the uncertainty over the pattern and path of economic recovery.  At this juncture, we concede that the likelihood of a double-dip receission is small.


Please find attached the article by Mr Lee Heng Guie _^here

» Top