Global economy to pick up, despite rocky first half
2011-07-12 12:58:07
Despite a rocky first half for the global economy in 2011, some analysts believe a pick-up will come in the next six months.
Credit Agricole predicts regional economic expansion will slow to 7.8 per cent this year, but said growth will remain robust.
The eurozone debt crisis and weak US economic data have led to fears of a prolonged "soft patch" in the global economy.
But some analysts believe the worst is over for 2011.
In its mid-year report, Credit Agricole said it believes the US will lead growth among developed economies in the second half of the year, and that Japan will bounce back due to reconstruction efforts.
"We believe the soft patch will be temporary. We believe growth in the second half of this year will recover, as energy prices drop and as the supply chain from Japan shows a significant improvement," said Mitul Kotecha, Head of Global Foreign Exchange Strategy, Credit Agricole CIB.
Credit Agricole is expecting the US economy to grow by 2.5 per cent for the whole year.
But it said the Japanese economy will contract by about 0.7 per cent before returning to growth of 2.9 per cent in 2012.
Overall, the corporate and investment bank expects Asia to grow some 7.8 per cent this year, down from 9.2 per cent in 2010.
Emerging economies in the region led by China and India are seen setting the pace, helping to provide some buffer from the global economy.
"Asia is still highly exposed to what's happening in developed markets through the exports channel. Exports are a much higher proportion of Asia GDP than they are the GDP of the countries anyone else in the world. And it will be important for regional policy makers to try to stimulate domestic demand if the amount from the US and from China decelerates," said Dariusz Kowalczyk, Senior Economist for Asia ex-Japan, Credit Agricole CIB.
The Chinese economy is seen growing 9.3 per cent this year.
Credit Agricole said the pace of Asia's growth will remain above any other region in the world. But it said a modest slowdown this year is unavoidable due to continued monetary tightening and appreciating currencies.