European Union leaders will agree more steps today to avert a repeat of the banking crisis that has sapped the world economy and the IMF said 2010 might deliver stronger growth than earlier forecast.
The EU summit in Brussels will back the creation of a cross-border system of bank supervisors, a draft text showed, after talks yesterday alleviated British fears that the new pan-EU bodies could undermine the power of its national regulators to guide its financial service sector.
The crisis that struck nearly two years ago when a long-running global credit boom went bust is destroying jobs in economies around the world and the International Monetary Fund steered clear on Friday of suggesting signs of slowing economic decline amounted to a recovery.
“After two quarters of an unprecedented global economic contraction that carried through this year's first quarter, signs are emerging that the rate of output decline has moderated,” IMF First Deputy Managing Director John Lipsky told a Turkish business conference.
iven this backdrop, “I expect that in the coming weeks we will revise our growth projections modestly upward, mainly with regard to 2010,” Mr Lipsky added.
A source from the Group of Eight leading economies told Reuters on June 11th that the IMF had raised its global growth estimates for 2010 to 2.4 per cent from 1.9 per cent in April because of stimulus measures taken in recent months.
There were more signs yesterday and today that the trillions of dollars governments around the world have poured into economic stimulus had provided a safety net of sorts.
US jobs data yesterday showed the first drop since January in the number of unemployed people staying on benefit rolls and manufacturers in the US Mid-Atlantic region reported business shrinking less sharply than expected.
That helped to reassure world stock markets, which had begun to stall earlier this week as doubts set in about the degree and pace of economic recovery that had been priced into a strong rally since March.
Today, the MSCI world stocks index edged higher, following a late turnaround in Asian equities.
Thai data today showed exports fell by a record 26.6 per cent in May but the fall in shipments to China - widely viewed a driver of any world economic recovery - was the smallest since January.
“US economic data is pointing to an end to the US recession. Good news? Absolutely,” said Patrick Bennett, Asia FX and interest rate strategist at Societe Generale in Hong Kong.
“But unfortunately the end of recession does not mean the end of pain.”
Reuters