Reality rests between slowdown and speed-up scares

- "The slowdown scare of mid-2010 has passed. The sum of purchasing managers’ reports from around the world probably captures the environment best: growth has slowed, but not so immodestly as to sustain fears of the dreaded double-dip relapse into renewed recession."
- "In the near term, we continue to expect the global economy to muddle through the frequent slowdown scares, albeit expanding at a slightly slower pace than our July estimates. Our 2010 global GDP forecast remained unchanged at 4.6%, while the growth forecast for 2011 moved down by one tenth to 4.3%."
- "While such expectations are reassuring as far as they go, even if realized they would leave a huge amount of global GDP still missing relative to the pre-crisis path (Exhibit 1). The global economy would need to grow much faster to restore the recessionary loss of GDP that nearly seven billion people rely upon for their material well-being."
- "Inflation pressures remain subdued. We expect the slow recovery, especially in the First World, to keep inflation low, with deflation an unlikely but not implausible contingency."
- "Against this backdrop, we expect major central banks including the Fed, BOJ, ECB, and BOE to continue to keep rates “lower for longer.” We also expect central banks in commodity-intensive economies like Brazil, Canada, and Australia to move to the sidelines in their tightening cycles earlier than our prior expectation. In Non-Japan Asia, we continue to expect the pace of interest rate “normalisation” to be slow this year (with the exception of India)."
- "The “reach for yield” required by pension plans and other financial structures linked to the First World’s entitlement culture is likely to continue to be very frustrating. The flow of capital to the outperforming emerging market segment of the global economy could intensify. More generally, financial markets, having just begun to shake off their slowdown scare, may now be at the threshold of incorporating a speed-up scare into their valuation psychology."

CreditSuisse Global Economy Monthly Review 20100907

No comments:

Post a Comment