21
Sep
Think tank says 'no double dip'
The world economy is not heading for a double-dip recession, the
Centre for Economics and Business Research (CEBR) has
predicted.
But the think tank has revised down its growth forecasts after
downgrading its growth prospects for the US economy.
It now expects the world economy to grow by 3.5% this year,
compared with a previous forecast of 3.7%.
Separately, the Organisation for Economic Co-operation and
Development (OECD) also cut its US growth forecast.
The OECD predicts the US economy will grow by 2.6% this year,
having previously predicted expansion of 3.2%.
It also warned in its latest economic survey of the US that the
downturn may trigger long-term damage to the economy, with higher
long-term unemployment.
The CEBR said that it expects the US economy to expand by 2.2% next
year, after growing by 2.5% this year.
'Bet my shirt'
In its quarterly Global Prospects report, the CEBR also lowered its
global forecasts for the next four years.
The sharpest downgrade is for next year. It cut its growth forecast
for 2011 to 3.4% from the 4.1% it had predicted just three months
ago.
Although US manufacturers have increased their output over the past
year, the CEBR does not expect the level of growth caused by the
end of destocking to last.
It believes corporate spending in the US will eventually boost
growth, but this may not happen until 2012.
"I would be prepared to bet one of my better shirts on there being
no global double dip," said CEBR chief executive Douglas
McWilliams.
"Although their growth will be affected by slower growth in the
West, the emerging economies are too resilient for global growth to
go negative again.
But the CEBR also warned that the failure of the wheat harvest
in eastern Europe, caused by drought and wildfires, meant that
consumers worldwide would face higher food prices and therefore
have less money available for spending on other goods and
services.
www.bbc.co.uk/news 20th Sept 2010