THE recession will bottom out late this year, with growth picking up early next year, according to a leading economic forecaster on Friday.
But Mr Adrian Cooper, managing director of British firm Oxford Economics, acknowledged that the prospects for the global economy are very uncertain.
'It will be six months before we are clear whether we are in a V-shaped recession or in a prolonged period of weakness,' he said. A V-shaped recession has a sharp decline, followed by a quick recovery.
In the medium term, a combination of increased financial regulation and the need to unwind the economic stimulus measures now being enacted is likely to weigh on economic growth, he added.
Mr Cooper, in Singapore to present the highlights of a study on the global outlook, told a gathering at the Singapore Cricket Club that he expects the world's economy to contract by about 2.5 per cent this year but turn positive to 2.2 per cent next year.
He also forecast that credit markets will normalise by the end of this year, helped by further government bailouts.
In the meantime, he said, governments and central banks need to continue to do all they can to stimulate their economies, including more measures to support banks.
But once recovery comes, a period of higher inflation is likely, he added.
He tipped Singapore to grow by 4.8 per cent next year, recovering from a 7.2 per cent contraction this year.
Read the full report in Saturday's edition of The Straits Times.
