Global economy at turning point

Jean-Claude Trichet ... We are as far as growth is concerned, around the inflection point in the cycle
Leading central bankers optimistic recovery is setting in

BASEL/LONDON: The global economy is about to turn the corner, leading central bankers said yesterday, and their cautious optimism was backed by data showing growing signs the economic and financial crisis is abating.

China said its efforts to boost economic growth were working and surveys showed business confidence creeping back in other major emerging and European Union economies.

Yet for many, economic recovery may take a long time to arrive: EU and US businesses are set to cut more jobs in the coming months and banks are still absorbing the impact of bad debts from the financial and economic crisis.

Leading central bankers meeting at the Bank for International Settlements in Basel summed up the qualified hopes.

“We are as far as growth is concerned, around the inflection (turning) point in the cycle,” said European Central Bank president Jean-Claude Trichet. “In certain cases you see already a picking up (in gross domestic product). In other cases you see that it continues to fall but at a lower pace.

“One has to remain alert because we are in uncharted waters, even if we are around the inflection point and even beyond in certain parts of the global economy,” said Trichet, who is chairing the BIS meeting.

Some evidence the worst may be over came from crude oil imports data yesterday that showed a spike in demand in China, whose rapid growth into one of the world’s biggest economies was powered by global demand for its manufactured goods until the rapid downturn last year.

Deputy Central Bank governor Su Ning told a financial conference: “China’s economy is expected to sustain rapid growth for some period in the future.”

Prime Minister Wen Jiabao told state radio the government’s response to the financial crisis went far beyond its US$585bil stimulus and suggested it would be rolling out new initiatives throughout the year.

Growing optimism about the US economy was underlined on Sunday by an influential survey of private forecasters predicting it would resume growth in the third quarter. But the panellists surveyed in the Blue Chip Economic Indicators newsletter also predicted that US unemployment would peak only in the first quarter of 2010.

The Organisation for Economic Co-operation and Development issued its leading indicator for March, which fell to 92.2 from 92.4 the previous month, giving a 9.5-point drop year-on-year.

However, it said the pace of decline in the world’s major industrialised and emerging economies was easing, particularly in China, France, Italy and Britain.

Surveys of services sector firms in the European Union and the four major emerging economies – Brazil, Russia, India and China – showed an increasing number forecasting growing business and revenues in the next 12 months.