Belfast Telegraph

Northern Bank report eases fear of double-dip recession

By Clare Weir

Northern Bank has said that global growth should pick up in 2011, easing fears of a double-dip recession.

The bank's latest global scenarios report shows an improvement in economic data for the last quarter after signs over the summer that global recovery was slipping.

It said fears of a double-dip recession could be lifted by news that global growth forecasts for 2011 and 2012 are now approximately 4.4% and 4.5% respectively.

The report shows that the US economy has performed better than expected in the last quarter with economic data pointing to a recovery in growth. Private consumption in the US was up, rising close to 3% in the third quarter of 2010 while GDP for the fourth quarter is now around 2.6%.

Northern Bank chief economist Angela McGowan said that earlier fears of a double-dip have not been realised.

"The US has performed much better than expected with private consumption more upbeat, improved business confidence and some positive momentum in business investment growth."

But while the global outlook had improved, she said the European debt crisis had triggered new risks.

"The European debt crisis has, without doubt, taken a turn for the worst and we see worrying signs of contagion to debt markets in Spain and Italy."

"So far, the effect on equity and corporate credit markets has been very limited," said Ms McGowan.

"The debt crisis last spring brought about a 15% fall in equity markets, whilst this latest crisis has only had a 3% impact. In Europe, economic activity has continued to grow above trend with an average of 2.8% annualised quarterly growth."