Economic Recovery. Does this silver lining have a cloud?
As Asian economies show signs of recovery, so forecasts for global growth have improved, according to a London based survey of International economists reported in the AFR.
Whilst this undoubtedly brings good news to not only Asia, but the World, it will also provide some “interesting times” as it is unclear how the growth will unfold. Certainly Australia’s export orientated economy will benefit, but it is unclear how this will affect the US economy, which has largely taken up the slack during Asia’s troubled times.
With oil prices now well over US$20 a barrel, up 50% from their lows adding to input pricing pressures, inflation, predicted by many to be dead and buried, may also re-appear as demand picks up.
If there is one thing that markets dislike it is uncertainty, and how the World’s economies will react to the recovery is just that – uncertain.
Add to this the shock of a record US deficit of $21 billion, and economist’s tealeaves will be working overtime this morning.