In the United States, the world's biggest economy, key jobless claims fell to a six-month low point, and a four-week average seen as a better indicator also declined. -- PHOTO: REUTERS
FRANKFURT - SOME hard data is now underpinning prospects for a global economic recovery, but world leaders urge caution and at least one says the worst is still to come for some.
Fast recovery unlikely
Barclays Capital economist Thorsten Polleit told AFP: 'Credit is drying up and it's very unlikely that it starts flowing again as easily around the globe as it did a couple of years ago,' a phenomenon now seen as a principal cause of the crisis.
On an industrial level, Polleit said the end of the credit boom 'is going to change the production structure of major economies substantially.' The economist explained that 'by generating ever-greater doses of credit,' the global monetary system had a 'formative impact on ... the kind of jobs that were created, on the kind of products people were buying.' He observed: 'This is now subject to a correction.' A global recovery is nonetheless likely, though most analysts use terms such as fragile, modest or subdued to describe it.
LONDON - GLOBAL equities are falling as US banks prepare their latest earnings, throwing doubt on a swift recovery for the world economy following the worst downturn since the 1930s.
Investors are dumping shares as optimism fades that the worst of the global recession is over and markets brace for a string of corporate results - particularly from the troubled banking sector in the United States.
So should we perk up and head for the high street, keep cash ready under the bed, or prepare for long, hard times? Some sample figures released this week gave reason for hope.
In the United States, the world's biggest economy, key jobless claims fell to a six-month low point, and a four-week average seen as a better indicator also declined.
In Germany, the biggest European economy and a top global exporter, industrial orders and output soared in May, catching analysts by surprise.
And the International Monetary Fund raised forecasts for growth in China, the world's third-biggest economy, to 7.5 per cent this year from 6.5 per cent, as well as those for the US and Japan, number two worldwide.
Germany, Japan and the US are all believed to be at the bottom of their worst recessions since the bitter battles of World War II. That's the good news.
But leaders of the Group of Eight agreed meanwhile that a full economic recovery was not waiting around the corner, US President Barack Obama said on Friday.
And World Trade Organisation chief Pascal Lamy said: 'The worst of the crisis in social terms is still to come, which means that the worst of the crisis in political terms is still to come.'
Other examples of seeing the glass half-empty or half-full were provided by two Paris-based groups, the International Energy Agency and the Organisation for Economic Cooperation and Development.
For many analysts, the key factor in determining how things will go is a single word: credit. -- AFP
