Economy: Prospects for global growth
There are prospects for growth in the global economy for the rest of the year, despite the challenges in Europe, says Danske Invest's chief analyst Bo Bejstrup Christensen. But the challenges have not disappeared.
During the autumn we will experience progress in the global economy, says Danske Invest’s chief analyst Bo Bejstrup Christensen. However, he is highlighting a number of political challenges in both the USA and Europe which can obstruct a positive development.
Let us begin on the other side of the Atlantic. The American economy is growing. Not strongly, but it is growing. And Bo Bejstrup Christensen is actually slightly more optimistic with respect to the American economy than other analysts, and he expects continued growth for the remaining part of the year and 150,000 new jobs in the USA per month.
USA may hit a brick wall
The challenges in the USA are largely in the hands of the politicians. A number of fiscal measures to underpin the economy will expire at the turn of the year, and it is of decisive importance to the continued growth in the US economy that these measures are continued.
”If the politicians cannot agree on continuing these measures, the US economy will come up against a wall. It is of decisive importance to US economic growth that the politicians will extend these supporting measures," says Bo Bejstrup Christensen.
Europe still marked by crisis
If we turn our attention towards Europe, Bo Bejstrup Christensen expects that the European economy will continue to decrease during the autumn. However, the recession will become increasingly less severe, i.e. the economy will shrink less.
But also here the development depends on political events and on how the ECB, the European central bank, will respond to the critical yield levels on Southern European bonds. It is highly likely that we will receive an announcement in this respect at the beginning of September, and this will be a key event, explains Bo Bejstrup Christensen.
Chinese growth increases
If we turn to China, we still see stable growth as opposed to in Europe. Chinese growth has slowed down. This is so because the Chinese authorities have introduced tightening measures to avoid among others a housing bubble and to keep inflation under control. Bo Bejstrup Christensen is optimistic with respect to the Chinese economy.
”We expect moderately increasing growth, and the Chinese authorities are slightly easing their measures which will provide room for increased growth. The banks’ willingness to provide loans is, however, a decisive factor for Chinese growth going forward,” explains Bo Bejstrup Christensen.
