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Global recovery on track in spite of Middle East unrest

Published 14/03/2011

Tahrir square in Cairo, Egypt, scene of protests against President Hosni Mubarak
Tahrir square in Cairo, Egypt, scene of protests against President Hosni Mubarak

The global recovery has strengthened in the past quarter and the economy promises to grow further during the first half of 2011, according to a new study by Northern Bank.

The latest 'Global Scenarios' report says that despite new risks surfacing from the Middle East, the early part of the year is shaping up to be particularly strong for the global economy.

The growth is being driven by strengthening demand coming from both private consumption and rising corporate investment.

While the global recovery is expected to stay on track into 2012, the survey predicts some slowing in growth in the second half of 2011 and 2012 as tighter fiscal policy kicks in and higher commodity prices take their toll.

Northern Bank chief economist Angela McGowan said the global recovery has become more broadly based with all regions experiencing growth apart from debt-troubled European countries.

"Private consumption in the US has strengthened for the last two quarters and in the Euro area there are positive signs that consumers are increasing spending at the beginning of 2011," she said.

"The report indicates that new risks have surfaced from the Middle East unrest and also the risk of renewed tensions in debt markets still prevails. However, it now appears that the world is more resilient to new shocks.

"A new risk factor to the global recovery is coming from the turmoil in the Middle East.

"Oil prices have been pushed higher and this will take away some purchasing power from consumers.

"Fortunately the global economy is now more resilient and although uncertainty is high, we don't expect the recovery to be derailed by the unrest," she added.

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