European Central Bank president Jean-Claude Trichet said today that policy makers see first signs of a global economic recovery.
"The global economy is around the inflection point with some being beyond the inflection point,” Mr Trichet said today at a press conference at the Bank for International Settlements in Basel, Switzerland.
A number of recent reports are “encouraging, but it’s no time for complacency.”
Central banks round the globe have aggressively lowered interest rates and governments have injected billions into their economies to stem the world’s worst recession since World War II.
There are signs that the economic slump may be bottoming out. US consumer confidence rose by the most in more than two years in April, a gauge of US manufacturing activity had its biggest bounce since 2005 and German manufacturing orders increased for the first time in seven months in March.
Once global growth starts to pick up, central banks will have to scale back their support for the economy, Mr Trichet said.
“Insistence is put on the exit strategy, on the medium- term path that permits us to go back to a normal situation, a sound and sustainable situation,” he said. At the same time, central banks will “do what is necessary in terms of extraordinary measures, as long as necessary,” he added.
A report published today said leading economic indicators for March point to an easing in the pace of decline in the OECD although the rate of contraction remains marked. The composite leading indicators (CLI) for March decreased by 0.1 point and was 9.5 points lower than March 2008, the OECD said.
The CLI for the euro zone area was 7.9 points lower than March 2008 while that of the US was 11.9 lower. The CLI for Japan was 12.3 points lower that the comparable month last year.
The OECD report said that France, Italy and the UK were showing “tentative signs” of a pause in the economic slowdown. However, it said these countries, and China where a similar pause is evidence, were the exception.
The CLI for China in March increased by 0.9 point but remained 9.5 points lower than March 2008.