Our macro-economic view is one of guarded optimism.
We do not envisage steep recoveries occurring anywhere in the world, but we do see scope for the US and China to
make gradual ‘middle-of-the-road’ recoveries, leading to slow improvement globally.
The potential drivers for growth are different in each case.
In China, an easing of monetary policy means that credit
restrictions are being lifted and we expect positive effects
from this to filter through to the real economy.
In the US,
the housing sector recovery is probably already stronger
than we see it reported in the Press and should lift
consumer spending. In the current low interest-rate
environment, it is entirely possible for the US private
sector to compensate for the inevitable fiscal
retrenchment. The key for policy makers is to get the
timing right. We do not, therefore, envisage a recovery
strong enough to require a US interest-rate hike.ke.
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