Fresh and deep recession data is doing little to dampen “green shoots” talk that the global crisis is beginning to bottom out, although analysts are forecasting a long, bumpy journey to recovery.
Economists have seen light on the horizon in recent weeks and investors on Friday appeared to shrug off the latest backward-looking economic data as observers weighed how long it might be before a recovery really takes off.
The head of the IMF Dominique Strauss-Kahn told reporters on Friday that he expected the global economy to recover in the first half of next year and forecast the “beginning of the turning point” late this year.
The IMF this week forecast a “gradual” recovery in Europe next year if firm financial reforms are made. For Asia, top IMF official Takatoshi Kato said the recession promised to be “deeper and more prolonged” than in previous cycles.
Figures released on Friday showed Europe lurched deeper into its rut in the first quarter of this year and concerns rose over the threat of deflation in Japan.
Data showed that France, Austria and Romania officially entered recession and Germany logged its worst quarter on record. The 16-nation eurozone shrank by a record 2.5 percent, an official EU estimate showed.
“This should mark the nadir in the eurozone’s recession as there are mounting signs that the rate of contraction is now moderating,” IHS Global Insight economist Howard Archer said. “Nevertheless, we suspect that actual growth remains some way away.”
Europe’s main stock markets rose in the immediate wake of the growth announcements, shrugging off the grim figures as investors looked forward to a recovery, dealers said.
“This time around, the worst really seems to be over,” said Carsten Brzeski, an analyst at ING bank, commenting on the German growth figures.
“The worst part of the recession can now be seen in the rearview mirror but the road to recovery remains bumpy and long,” he said.
Analysts at the consultancy Capital Economics said growing confidence “could feed back into a virtuous circle of improving sentiment, rising stock markets and a stronger recovery.”
They added: “Rising equity prices will restore some of the lost household wealth and should boost consumer confidence, which for all the talk of ‘green shoots’ is still near rock bottom in most economies.”
Japanese central bank data meanwhile raised concern that the world’s number two economy may be facing a repetition of its 1990s deflationary spiral when falling prices led to weak consumer spending.
“I welcome some signs of easing in the economic slowdown. But we need to remain alert about overall economic conditions,” Japanese Finance Minister Kaoru Yosano told reporters.
Some economists have said over recent weeks that the world is entering a twilight zone of conflicting signs, with key indicators lighting the way to a recovery even as grim economic data and job cuts continue.
The IMF suggested in a report this week that the European Central Bank had scope to cut interest rates even further from their current record lows and urged tough measures to shore up Europe’s financial sector.
The EU promptly announced that some of its banks will undergo “stress tests” like their US counterparts.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
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