Global economic outlook - 4th quarter 2009The shape of the recovery in 2010 |
The year 2009 is coming to a close, arguably none too soon. The year began on the heels of a near breakdown of the financial sector and talk of another Great Depression. Thankfully, the year is ending on a more positive note with economists offering their views on the potential strength of the all but certain recovery.
In this issue of the Global economic outlook, our economists look at the shape of the imminent recovery across the globe, starting with a look at how the credit markets are likely to behave. This is a critical issue because weak credit markets could substantially offset the otherwise positive impact of aggressive monetary policy.
With regard to the U.S. economic outlook, the recovery may be stronger than expected due to a combination of stimulatory factors. Yet the recovery will be different in nature from past recoveries. Rather than being driven by the consumer, this recovery will be largely dependent on government spending and exports. And there are still risks, which include continued troubles for housing, banks, commercial property, and consumer balance sheets, and the possibility of serious inflation.
In Asia, there are very positive signs for China’s unfolding recovery, powered by massive fiscal and monetary expansion. This is boosting growth quickly, but may also be setting the stage for potential problems down the road. These include inflation, excess capacity, insufficient domestic demand, and financial problems for banks. While the authorities have begun the process of withdrawing monetary stimulus, a smooth transition to market generated growth remains uncertain.
For more information, download the PDF report below.
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Global economic outlook - Q4 2009
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