No sign of global economy stalling this year
Surging inflation pressures and the natural disasters that ravaged Japan last month look unlikely to stall an ascendant global economy, a Reuters poll of around 350 economists showed on Thursday.
The survey of analysts from all over the world again showed the United States leading a rich-world recovery along with Canada, while respondents expect a jumble of strong and weak performances from the top European economies.
The world's third largest economy, Japan, will likely contract this quarter after the March 11 earthquake and tsunami that left nearly 28,000 dead or missing, also triggering a nuclear crisis that could last for months.
While economists are still digesting the ramifications of the disaster on global supply lines, many pointed to surging oil prices as the key risk for now.
"We've taken down our global growth forecasts over the last quarter very slightly, and that's on the back of higher oil prices," said Karen Ward, senior global economist at HSBC in London.
"The oil price impact is a net negative for the global economy, particularly for the United States. In the developed world, where wage growth is so weak, it already has dented US consumer confidence and it will be an issue for consumer confidence elsewhere."
The poll showed global growth at 4.2 percent this year and 4.3 percent next year – unchanged since the January poll.
That was just slightly less optimistic than the International Monetary Fund's forecast on Monday of 4.4 percent for this year. The IMF said oil prices and inflation posed new challenges to the progress of the world economy.
Just as finance ministers from the Group of 20 rich and emerging market nations meet in Washington, the latest Reuters survey showed rich-world economies will lag far behind India and China, which will see near double-digit rates of growth in 2011.
G20 finance ministers will be hoping to make progress on a plan to identify the countries that put the global economy at risk – but that could be tricky with a fast-diverging array of economic policies and prospects.
Canada and the United States should lead the rich world recovery in 2011 with annual average growth rates of 3.0 and 2.9 percent, respectively. Even rising inflation pressure is unlikely to dent this view in the case of the US economy.
"Inflation is going to be higher than most expect, but I do expect it to moderate some in 2012," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York. "Does this mean there is a genuine threat to the recovery? No."
On Monday, Brent crude hit a 32-month high above $127 a barrel, pushed higher by unrest in oil producer Libya. While it has since fallen, the commodity and energy rallies since the start of the year have sent gauges much higher, especially in Europe and emerging countries.
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