RECOVERY HOPES:THE EUROPEAN economy is showing signs of recovery and it is premature to say recent market developments indicate it would enter recession, the European Commission has said.
“I’m not sure we can conclude from a few days of serious evolution on the market that we are entering one type of recession or other types of economic recession,” said a commission spokesman in a daily briefing.
“We have economic forecasts that are actually more positive than what we see in other analysis made by actors in the financial markets,” he said.
Recent turmoil in international stock markets and the downgrading of US debt have prompted renewed fears of the emergence of a so called “double dip” recession.
New data showing a decline in German exports yesterday also raised concerns about the impact that slower global growth would have on European economies.
The commission spokesman said the EU executive continued to see signs of recovery in the euro area. He said many member states are making serious reform efforts, including Spain and Italy and that these efforts should lead to a recovery in growth.
The positive comments from the commission came as a poll of 200 economists by Reuters suggested the chances of another US recession are rising and Europe’s recovery was at risk.
“The world doesn’t look particularly rosy at the moment. There’s no question about that,” said Mark Miller, senior international economist at Lloyds Banking Group. “The equity market reaction over the last few days is a particular concern.”
The poll showed economists had a consensus for 2.3 per cent annual US growth, down from 3.1 per cent. The probability that the world’s largest economy would slip back into a second recession has risen to one in four, from one in five a month ago.
The poll found there was only a 30 per cent chance that the Federal Reserve would engage in a third round of bond purchases, or quantitative easing. It has already spent $2.3 trillion. The survey was undertaken over the past few days during the worst stock market sell-off two years ago.
