Worst fears of global growth may be subsiding

-Bloomberg Grounds for more hope that the global economy could avoid a major recession may develop in the coming week in business surveys showing a gradual recovery in much of the advanced world.

Purchasing Managers’ Indices for both the US and the Euro zone are expected by economists to hold higher. While many gauges will still suggest contraction, the upward direction of travel may add to a growing narrative that a softer landing is achievable. Also, the full effects of concerted policy tightening by central banks have yet to be felt.

Fueling such prospects are China’s reopening after a pandemic lockdown, evidence of slowing inflation, and the confident view of some senior European officials that their economies will not face recession. The International Monetary Fund may soon raise its outlook for the year, its head indicated on Friday.

“We have labor market strength, which translates into consumer spending and sustains the economy,” Kristalina Georgieva said at the World Economic Forum in Davos, Switzerland. “With China’s reopening, we expect growth to exceed the global average again this year.”

US fares will also be important, however, as the first estimate of fourth-quarter GDP due on Thursday could prove instructive. The economy looks set to expand at an annual rate of 2.7% in the last three months of 2022, following a 3.2% pace in the third quarter.

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