By the middle of 2010, estimates for the global GDP growth will be double of what it was a year ago, according to Kevin Logan, an independent global economist, speaking at Dow Jones’ 2010 Global Economic Outlook conference on Jan. 20, 2010.
“A year ago, the International Monetary Fund was predicting 2% global growth, but a new report at the end of the month is looking at 4%,” he said.
There will be quicker growth now, but high unemployment and slow growth in income will return later in the year, said Logan, adding that there will also be tensions in the foreign exchange market and volatility in the capital markets.
Michael Woolfolk, senior currency strategist with Citi, said the outlook for 2010 will depend on the actions of the U.S. Fed and how the dollar responds to its normalization of interest rates. He expects continued recovery, with U.S. growth at 3% or 3.5% GDP and the global GDP at 4% or 4.5.% out of China and India.
Woolfolk predicts the dollar will resume its decline and pick up in the second half of year, but Bob McTeer, fellow, macroeconomics with the National Center for Policy Analysis, cautions against too quick a change. “The strength of the dollar is good for living standards,” he said. “But given the depth of the recession, a strong dollar too soon will jeopardize the recovery.”
Global markets
As for global markets, the story is positive, according to Robert Buckland, chief global equity strategist with Citi. Global equities will be up 10% over the next 12 months and investors can expect Japan to be up 15%-to 20% this year. U.S. equities will be up 5%.
“We’ve gone from extreme pessimism, crossed over to skepticism and now we’re moving into optimism,” said Buckland. “But we’re not in euphoria [yet].”
Regarding emerging markets, Buckland said he is often asked if they’re going to be the next bubble, but said it’s too early to make that call.
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