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On a knife’s edge

- "A flow of disappointing news – particularly in the US – has led us to revise down our global growth expectations. Focus will probably continue to be on the US where the economy is expected to balance on a knife’s edge between recovery and another downturn. Double-dip fears are likely to be an ongoing theme for some time."
- "We now have below-consensus forecasts for US growth at 2.6% and 2.3% for 2010 and 2011 respectively – a downward revision of around one percentage point in both years compared with our June forecasts. We look for the economy to grow by 1.5-2.0% in H2 10 before recovering gradually during 2011. The main risk is that the economy gets stuck at a low growth level. We see the risk of a new recession as very low."
- "In Euroland, activity surprised strongly on the upside in Q2 10, leading to an upward revision of our 2010 growth expectations. We have probably seen the peak, though, and we see the economy growing more in line with the long-term trend at around 2% in 2011 as the export engine loses some steam. Our forecasts for Euroland continue to be above consensus."
- "The Asian economy surprised on the downside during the spring, leading to a downward revision of our growth expectations for 2010. However, we expect Asia to recover during the coming quarters."
- "Inflation is expected to remain subdued and policymakers in G3 will continue to focus on supporting growth. We see a 40% probability that the Fed will start another round of quantitative easing (QEII). The ECB is expected to keep rates on hold throughout most of 2011. Chinese policymakers are sidelined but we expect tightening to resume in 2011."



DenDanske Global Scenarios Sep2010

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