Global recovery is set to begin, says bank report
June 16th, 2009 - 9:33 am ICT by IANSBy Gurmukh Singh
Toronto, June 16 (IANS) The worst is over for the global economy and a recovery is likely to begin later this year, says a bank report released here Monday.
The global economic crisis has bottomed out and positive indicators have begun to emerge, said the report by the Royal Bank of Canada which is the top bank in the country. It said there were encouraging signs for global recovery as the US economy was showing signs of recovery after worst-ever declines in its GDP in the last quarter of 2008 and the first quarter of 2009.
Thanks to low interest rates, an easing in credit crunch and Obama’s fiscal stimulus package, the US housing market is already showing some stability, it said. This, coupled with rising consumer confidence, hints at a moderate recovery for the US economy by the second half of 2009, the report said.
“The benefits of significant fiscal and monetary policy stimulus (in the US) are starting to have traction,” said RBC chief economist Craig Wright. He said, “There is an unprecedented amount of money bolstering the world economy.
” What we will be watching is the impact this spending has on labour markets, as well as household and business confidence. The degree of impact will be a crucial factor in shaping economic recovery.”
Though the recession has thrown six million Americans out of jobs - pushing the unemployment rate to a record 9.4 per cent in 25 years, the recent data suggests that this rate has started declining, the report said.
It said home sales in the US are also poised to pick up as affordability improves.
But the most potent indicator of the onset of recovery was that US consumer spending has increased after six months of decline.
This trend will continue in the second half of 2009 because of low interest rates, firmer credit markets and fiscal stimulus, the report said.
About Canada, the report said its economy will shrink by 2.4 per cent this year. With over 360,000 jobs lost nationwide since October, consumer confidence will remain low as the unemployment rate peaks at 9.2 per cent by the end of 2009.
The report forecast that the Canadian dollar, which has rallied 15 percent since March, will hover between 85 to 92 cents US for the remainder of this year.
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- Touted best among G8, Canadian economy on rebound - Dec 15, 2009
- India, smaller Asian economies to lead growth - Feb 15, 2011
- `Eurozone crisis to dent Canadian growth' - Jan 19, 2012
- Canada holds bank rate at 1 percent - Jan 18, 2012
- Global economy to grow 2.7 percent in 2010: World Bank - Jan 21, 2010
- Rate cut will stimulate growth: Montek - Apr 17, 2012
- Global recovery has begun, says Bank of Canada - Jul 22, 2009
- US labour market, economy remain weak: Fed - Aug 31, 2011
- India set to grow at 9.7 percent: IMF - Oct 06, 2010
- US consumer confidence dips further - Feb 05, 2010
- Bank of Canada warns of growing mortgage debt - Feb 24, 2012
- World going through stormy period: WTO chief Lamy - Sep 06, 2011
- US forecasts slow economic growth in coming quarters - Feb 16, 2012
- US loses 'stable' outlook from top agencies - Nov 29, 2011
Tags: bank of canada, business confidence, chief economist, consumer confidence, craig wright, credit crunch, credit markets, fiscal and monetary policy, fiscal stimulus, global economic crisis, global economy, global recovery, gurmukh, labour markets, low interest rates, royal bank of canada, stimulus package, unemployment rate, us housing market, world economy