Central bankers from the world's richest countries have said economic recovery appeared to be on the way.
"The situation in the short term remains relatively weak, but in contrast to two months ago, there were certainly some signs of a prospective recovery beginning to emerge," said Bank of England governor Sir Edward George, who chaired a meeting of bank governors in the Swiss city of Basel.
He said the G10 thought the US economy had probably bottomed around the turn of the year. Economic news from the US, which was "generally negative" two months ago, was now "more mixed and modestly encouraging". The crisis in Argentina seemed to have had no contagious effect on other countries, he said.
Sir Edward said the meeting was much gloomier about Japan, which seemed set for "continuing stagnation" and needed painful structural reform before growth could resume.
But he said there were bright spots among emerging market economies in Asia, with good news from South Korea's high-technology sector echoing the positive signs from the United States. Growth in China should be around 7 per cent in 2002, similar to its rate last year, he said.
Sir Edward singled out improving confidence indicators and adjustment of inventories in the US as evidence that growth had bottomed. "As we go through the year, hopefully we will see the recovery," he said.
He said the eurozone economy was "pretty flat" and that this could well continue in the early part of the year before a pick-up later.
But Sir Edward warned against assuming a rapid economic improvement, as it was too early to rule out more cuts in interest rates in the US and the eurozone. "Financial markets were more optimistic about a rapid recovery than independent economists," he noted.
AFP