Analysis: Recovery gains ground, but Davos will discuss West’s risks

Comment on this story


Paul Carrel Davos

A combination of record low interest rates, ample liquidity and faster economic growth should sustain the world’s recovery from financial crisis this year.

Confident that the outlook for the world’s biggest economy is brightening, the US Federal Reserve has paved the way for an end to its stimulus programme and, after a bout of market turmoil last year, investors seem prepared for this.

But the us central bank’s effort to return to pre-crisis policy settings still represents a huge leap in the dark as it exits from an unprecedented bout of money printing.

An ill-judged move could threaten economic revival worldwide, just one of the dilemmas facing policymakers from America, Europe and Asia as they gather this week for an annual meeting in the Swiss resort of Davos.

Protagonists include us Finance Minister Jack Lew, Japanese Prime Minister Shinzo Abe, European Commission president José Manuel Barroso and central bankers Mark Carney, Mario Draghi and Haruhiko Kuroda. A “senior leader” from China is expected.

Broadly, the risks they face are slower-than-expected us growth, euro zone deflation, an absence of structural reforms in Japan, and bad loans in China.

“While the Fed is trying to normalise monetary conditions to avoid a credit bubble, China is trying to implement financial sector reforms to end one,” Deutsche Bank economist Michael Spencer said. “Both potentially threaten the sustainability of growth.”

The balance of risks for this year may be tilted towards the US and the euro zone, even if policy challenges facing Japan and China appear greater.

Investors have priced in a lot of good news, with European shares hitting a five-and-a-half-year high last week. The risk is that weaker-than-expected growth could knock markets and unsettle the global recovery.

“What could trigger a correction is that growth turns out to be weaker than markets have discounted,” said Andrew Bosomworth, a senior portfolio manager at Pimco. “In the case of equities, markets have discounted some rosy economic conditions.”

The challenge for policymakers in the US and Europe is to manage policy expectations at a time when inflation is not performing as expected.

Some Fed officials worry tepid price rises mean the us recovery is not as solid as it seems. With growth and job creation should come inflation.

Given that uncertainty, us central bankers must convince hesitant consumers that even if the era of quantitative easing is drawing to a close, an interest rate rise remains a long way off.

“The Fed’s next challenge is not over tapering, it is over rates and guidance,” said SGH Macro Advisors chief executive Sassan Ghahramani.

If it fails to convince, market interest rates which often set the cost of borrowing could rise too quickly and choke off recovery in the US and beyond. If that happens, investment will leach out of emerging markets as higher returns lure US funds home.

If low inflation is a puzzle in the US, prices could start falling in Europe. International Monetary Fund managing director Christine Lagarde, who speaks at Davos tomorrow, expressed concern last week. “If inflation is the genie, then deflation is the ogre that must be fought decisively.”

Draghi, the European Central Bank (ECB) president who was feted at Davos last year as the euro zone’s saviour, draws a distinction between deflation as a protracted fall in prices, and necessary internal price adjustments in some countries allowing them to become more competitive.

Bosomworth noted: “The risk is that the internal devaluations that need to be done in these countries morph into deflation.”

Draghi is talking up the ECB’s readiness but shows little appetite to start on a round of Fed-style quantitative easing to stimulate the economy.

Meanwhile, the deflation threat stalks the bloc. Euro zone inflation is running at 0.8 percent, well below the ECB’s target of under 2 percent; it is almost minus 2 percent in Greece, and 0.7 percent in Italy. If Rome gets serious about tackling its debts, inflation and growth could evaporate and make paying down that debt even harder. – Reuters


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

     

Join us on

IOL-Social networks IOL-Social networks IOL-Social networks IOL-Social networks
BOTSHELOMAN
I'm a 32 year old woman looking to meet men between the ages of 35 and 42.
View Profile
Calmine
I'm a 24 year old woman looking to meet men between the ages of 25 and 40.
View Profile
ally_charmy80
I'm a 34 year old woman looking to meet men between the ages of 40 and 55.
View Profile
mitch09
I'm a 29 year old woman looking to meet men between the ages of 35 and 40.
View Profile
danda100
I'm a 47 year old woman looking to meet men between the ages of 37 and 52.
View Profile
tkay011
I'm a 23 year old woman looking to meet women between the ages of 25 and 45.
View Profile
LavishT
I'm a 21 year old woman looking to meet men and women between the ages of 25 and 27.
View Profile
Rivee
I'm a 24 year old woman looking to meet men between the ages of 26 and 32.
View Profile
fiksBee
I'm a 25 year old woman looking to meet men between the ages of 26 and 40.
View Profile
Sweetlipsss627
I'm a 21 year old woman looking to meet men between the ages of 25 and 50.
View Profile
Shazzyyyy
I'm a 29 year old woman looking to meet men between the ages of 28 and 35.
View Profile
Mbaliholysexyness
I'm a 19 year old woman looking to meet men between the ages of 19 and 27.
View Profile
curvalicious
I'm a 30 year old woman looking to meet men between the ages of 25 and 45.
View Profile
kiara_111
I'm a 24 year old woman looking to meet men between the ages of 26 and 35.
View Profile
SexyNonnie13
I'm a 36 year old woman looking to meet men between the ages of 18 and 100.
View Profile
zama1zn
I'm a 37 year old woman looking to meet men between the ages of 38 and 47.
View Profile
Sthandwasakhesit
I'm a 29 year old woman looking to meet men between the ages of 30 and 35.
View Profile
ProVoq
I'm a 43 year old woman looking to meet men between the ages of 50 and 70.
View Profile
Ticom_199
I'm a 29 year old woman looking to meet men between the ages of 29 and 45.
View Profile
Nola_505
I'm a 40 year old woman looking to meet men between the ages of 35 and 47.
View Profile
Leematt
I'm a 25 year old woman looking to meet men between the ages of 25 and 29.
View Profile
Foxy88
I'm a 22 year old woman looking to meet men between the ages of 25 and 33.
View Profile
samke_722
I'm a 22 year old woman looking to meet men between the ages of 22 and 25.
View Profile
LolliCandy
I'm a 20 year old woman looking to meet men between the ages of 21 and 35.
View Profile
fungi1971
I'm a 43 year old woman looking to meet men between the ages of 40 and 50.
View Profile
CYAGal
I'm a 28 year old woman looking to meet men between the ages of 35 and 50.
View Profile
MeltChocolate
I'm a 35 year old woman looking to meet men between the ages of 40 and 50.
View Profile
RealBlackPearl
I'm a 22 year old woman looking to meet men between the ages of 25 and 35.
View Profile
FiftyshadesB
I'm a 40 year old woman looking to meet men between the ages of 32 and 45.
View Profile
mcgoyer
I'm a 26 year old woman looking to meet men between the ages of 27 and 35.
View Profile
Royalness
I'm a 29 year old woman looking to meet men between the ages of 30 and 45.
View Profile
armor2014
I'm a 55 year old woman looking to meet men between the ages of 45 and 70.
View Profile
hellena_596
I'm a 37 year old woman looking to meet men between the ages of 37 and 45.
View Profile
Resa1995
I'm a 48 year old woman looking to meet men between the ages of 45 and 70.
View Profile
lala408
I'm a 46 year old woman looking to meet men between the ages of 40 and 55.
View Profile
mako_001
I'm a 35 year old woman looking to meet men between the ages of 35 and 70.
View Profile
kafze
I'm a 29 year old woman looking to meet men between the ages of 29 and 45.
View Profile
Blaq_chic
I'm a 26 year old woman looking to meet men between the ages of 25 and 45.
View Profile
sweetnessmgm
I'm a 26 year old woman looking to meet men between the ages of 40 and 63.
View Profile
kauwel
I'm a 40 year old woman looking to meet men between the ages of 39 and 55.
View Profile
SexLips
I'm a 26 year old woman looking to meet men between the ages of 25 and 45.
View Profile
hlehle888
I'm a 41 year old woman looking to meet men between the ages of 45 and 50.
View Profile
Mistry_lady
I'm a 41 year old woman looking to meet men between the ages of 35 and 45.
View Profile
spesy59
I'm a 35 year old woman looking to meet men between the ages of 32 and 40.
View Profile
smilyz
I'm a 43 year old woman looking to meet men between the ages of 35 and 48.
View Profile
marryme2014
I'm a 34 year old woman looking to meet men between the ages of 37 and 45.
View Profile
Garnet3107
I'm a 44 year old woman looking to meet men between the ages of 35 and 45.
View Profile
DDeeZA
I'm a 45 year old woman looking to meet women between the ages of 19 and 50.
View Profile
Smashizo
I'm a 29 year old woman looking to meet men between the ages of 32 and 37.
View Profile
ntando_784
I'm a 34 year old woman looking to meet men between the ages of 40 and 50.
View Profile
RareT0paz
I'm a 35 year old woman looking to meet men between the ages of 38 and 60.
View Profile
PrincessEdelweiss
I'm a 43 year old woman looking to meet men between the ages of 35 and 50.
View Profile
sbobo736
I'm a 27 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Thel_89_zzz
I'm a 25 year old woman looking to meet men between the ages of 30 and 45.
View Profile
lexy278
I'm a 32 year old woman looking to meet men between the ages of 30 and 40.
View Profile
Funfoodie3012
I'm a 49 year old woman looking to meet men between the ages of 45 and 55.
View Profile
Baabbygirl
I'm a 27 year old woman looking to meet men between the ages of 27 and 36.
View Profile
ChocLatte
I'm a 44 year old woman looking to meet men between the ages of 40 and 60.
View Profile
Curvz
I'm a 41 year old woman looking to meet men between the ages of 38 and 45.
View Profile
leez83
I'm a 31 year old woman looking to meet men between the ages of 25 and 42.
View Profile
Emjae
I'm a 38 year old woman looking to meet men between the ages of 35 and 45.
View Profile
TABIEE
I'm a 29 year old woman looking to meet men between the ages of 40 and 100.
View Profile
Yahoo
I'm a 42 year old woman looking to meet men between the ages of 41 and 60.
View Profile
gloml66
I'm a 48 year old woman looking to meet men between the ages of 40 and 58.
View Profile
kncyLuv
I'm a 28 year old woman looking to meet men between the ages of 27 and 45.
View Profile
simphy337
I'm a 30 year old woman looking to meet men between the ages of 35 and 45.
View Profile
mello_185
I'm a 26 year old woman looking to meet men between the ages of 25 and 60.
View Profile
Dudutuli246
I'm a 34 year old woman looking to meet men between the ages of 35 and 50.
View Profile
FanceFace
I'm a 27 year old woman looking to meet men between the ages of 28 and 45.
View Profile
MASESHIA
I'm a 28 year old woman looking to meet men between the ages of 27 and 40.
View Profile
lulubaby
I'm a 33 year old woman looking to meet men between the ages of 30 and 70.
View Profile
Mag137
I'm a 60 year old woman looking to meet men between the ages of 57 and 67.
View Profile
nwaolisa
I'm a 31 year old woman looking to meet men between the ages of 32 and 41.
View Profile
pumpania
I'm a 27 year old woman looking to meet men between the ages of 28 and 40.
View Profile
honeybee_036
I'm a 25 year old woman looking to meet men between the ages of 25 and 50.
View Profile
ME_JE
I'm a 43 year old woman looking to meet men between the ages of 35 and 50.
View Profile
maria8022
I'm a 34 year old woman looking to meet men between the ages of 40 and 60.
View Profile
vicky74
I'm a 40 year old woman looking to meet men between the ages of 38 and 45.
View Profile
Noks76
I'm a 38 year old woman looking to meet men between the ages of 37 and 45.
View Profile
Noxy727
I'm a 27 year old woman looking to meet men between the ages of 30 and 36.
View Profile
Bonwel
I'm a 30 year old woman looking to meet men between the ages of 32 and 36.
View Profile
sassyfoxylady101
I'm a 33 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Roroe
I'm a 26 year old woman looking to meet men and women between the ages of 22 and 30.
View Profile
MissD123
I'm a 39 year old woman looking to meet men between the ages of 36 and 47.
View Profile
Dlodlolas75
I'm a 39 year old woman looking to meet men between the ages of 43 and 49.
View Profile
xoxohayleyxoxo
I'm a 26 year old woman looking to meet men between the ages of 18 and 100.
View Profile
Voicelady
I'm a 40 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Bathandwa83
I'm a 31 year old woman looking to meet men between the ages of 31 and 47.
View Profile
Leratomntande
I'm a 23 year old woman looking to meet men between the ages of 25 and 30.
View Profile
Casiopiea40
I'm a 44 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Cyndilouper
I'm a 35 year old woman looking to meet men between the ages of 30 and 45.
View Profile
kgotlas
I'm a 34 year old woman looking to meet men between the ages of 30 and 45.
View Profile
LadyJimpster
I'm a 23 year old woman looking to meet men between the ages of 22 and 28.
View Profile
briluu
I'm a 24 year old woman looking to meet men between the ages of 27 and 37.
View Profile
Zama101
I'm a 29 year old woman looking to meet men between the ages of 29 and 100.
View Profile
ranga322
I'm a 32 year old woman looking to meet men between the ages of 31 and 40.
View Profile
Rosey903
I'm a 40 year old woman looking to meet men between the ages of 38 and 45.
View Profile
TT200
I'm a 25 year old woman looking to meet men between the ages of 25 and 35.
View Profile
joocypie
I'm a 28 year old woman looking to meet men between the ages of 27 and 45.
View Profile
Melone
I'm a 27 year old woman looking to meet men between the ages of 30 and 42.
View Profile
Dalubuhle
I'm a 27 year old man looking to meet men between the ages of 26 and 45.
View Profile
bangstar
I'm a 22 year old man looking to meet women between the ages of 19 and 23.
View Profile
Mokoka01
I'm a 42 year old man looking to meet women between the ages of 28 and 35.
View Profile
Oupa0414
I'm a 29 year old man looking to meet women between the ages of 25 and 33.
View Profile
PoundzMm
I'm a 23 year old man looking to meet women between the ages of 23 and 30.
View Profile
mattgeah
I'm a 31 year old man looking to meet women between the ages of 25 and 40.
View Profile
tsvoritsvoto
I'm a 27 year old man looking to meet women between the ages of 18 and 25.
View Profile
Deathrow5662
I'm a 39 year old man looking to meet women between the ages of 25 and 35.
View Profile
Ma1010n
I'm a 26 year old man looking to meet women between the ages of 25 and 45.
View Profile
Seriousaboutlife325
I'm a 38 year old man looking to meet women between the ages of 18 and 100.
View Profile
gothicD
I'm a 44 year old man looking to meet women between the ages of 18 and 37.
View Profile
Bento1
I'm a 52 year old man looking to meet women between the ages of 38 and 50.
View Profile
charged
I'm a 40 year old man looking to meet women between the ages of 25 and 35.
View Profile
kpl23
I'm a 35 year old man looking to meet women between the ages of 26 and 34.
View Profile
Ernie_Manyesa
I'm a 32 year old man looking to meet women between the ages of 20 and 45.
View Profile
LIONKING915
I'm a 59 year old man looking to meet women between the ages of 38 and 50.
View Profile
Smooth_Kriminal
I'm a 27 year old man looking to meet men between the ages of 25 and 45.
View Profile
Shadra143
I'm a 22 year old man looking to meet women between the ages of 18 and 45.
View Profile
dlalo
I'm a 44 year old man looking to meet women between the ages of 18 and 100.
View Profile
Diva1308
I'm a 43 year old man looking to meet women between the ages of 18 and 100.
View Profile
tripplekkkk
I'm a 37 year old man looking to meet women between the ages of 18 and 30.
View Profile
TSKgosiemang
I'm a 52 year old man looking to meet women between the ages of 35 and 50.
View Profile
tonym
I'm a 44 year old man looking to meet women between the ages of 24 and 35.
View Profile
Minkh
I'm a 30 year old man looking to meet women between the ages of 18 and 29.
View Profile
Washe
I'm a 37 year old man looking to meet women between the ages of 25 and 33.
View Profile
Kelvin7777
I'm a 50 year old man looking to meet women between the ages of 42 and 56.
View Profile
THOKZANHLA
I'm a 44 year old man looking to meet women between the ages of 25 and 44.
View Profile
Sabloma
I'm a 45 year old man looking to meet women between the ages of 20 and 35.
View Profile
Satisfactor99
I'm a 37 year old man looking to meet women between the ages of 18 and 35.
View Profile
Thamza_77
I'm a 37 year old man looking to meet women between the ages of 18 and 35.
View Profile
Qtip
I'm a 30 year old man looking to meet women between the ages of 26 and 32.
View Profile
GD1
I'm a 70 year old man looking to meet women between the ages of 55 and 65.
View Profile
Siwithpie
I'm a 44 year old man looking to meet women between the ages of 23 and 45.
View Profile
shooter_949
I'm a 51 year old man looking to meet women between the ages of 20 and 50.
View Profile
Rendzo
I'm a 47 year old man looking to meet women between the ages of 25 and 45.
View Profile
Fanzonator
I'm a 28 year old man looking to meet women between the ages of 25 and 45.
View Profile
lookingforfunza
I'm a 36 year old man looking to meet women between the ages of 20 and 40.
View Profile
dev_xoxox52
I'm a 53 year old man looking to meet women between the ages of 41 and 65.
View Profile
mesut909
I'm a 45 year old man looking to meet women between the ages of 25 and 55.
View Profile
mcD
I'm a 39 year old man looking to meet women between the ages of 25 and 40.
View Profile
Jono693
I'm a 42 year old man looking to meet women between the ages of 25 and 45.
View Profile
Lucky123nxt
I'm a 36 year old man looking to meet women between the ages of 18 and 40.
View Profile
TuEsDAy
I'm a 52 year old man looking to meet women between the ages of 35 and 55.
View Profile
STONE_228
I'm a 42 year old man looking to meet women between the ages of 18 and 35.
View Profile
shiva709
I'm a 56 year old man looking to meet women between the ages of 45 and 56.
View Profile
lmn4life
I'm a 37 year old man looking to meet women between the ages of 28 and 35.
View Profile
Mxo87
I'm a 27 year old man looking to meet women between the ages of 18 and 30.
View Profile
SSBK547P
I'm a 39 year old man looking to meet women between the ages of 18 and 30.
View Profile
Lawrence218
I'm a 26 year old man looking to meet women between the ages of 25 and 39.
View Profile
Deejay_homy
I'm a 46 year old man looking to meet women between the ages of 18 and 42.
View Profile
gario
I'm a 54 year old man looking to meet women between the ages of 18 and 50.
View Profile
mixido2
I'm a 39 year old man looking to meet women between the ages of 18 and 35.
View Profile
Vbe2014
I'm a 37 year old man looking to meet women between the ages of 25 and 30.
View Profile
sweetman465
I'm a 67 year old man looking to meet women between the ages of 48 and 62.
View Profile
JonnyBee
I'm a 26 year old man looking to meet women between the ages of 19 and 28.
View Profile
Clownstotheleftofme
I'm a 45 year old man looking to meet women between the ages of 32 and 41.
View Profile
CoolnCalm
I'm a 35 year old man looking to meet women between the ages of 25 and 45.
View Profile
GWL321
I'm a 58 year old man looking to meet women between the ages of 46 and 56.
View Profile
Moxion
I'm a 27 year old man looking to meet women between the ages of 18 and 35.
View Profile
mfhalim
I'm a 42 year old man looking to meet women between the ages of 18 and 35.
View Profile
catcher182
I'm a 22 year old man looking to meet men between the ages of 20 and 24.
View Profile
myth909
I'm a 34 year old man looking to meet women between the ages of 25 and 45.
View Profile
Eriqnes
I'm a 33 year old man looking to meet women between the ages of 21 and 35.
View Profile
bobbylava
I'm a 35 year old man looking to meet women between the ages of 18 and 31.
View Profile
gwbyo
I'm a 41 year old man looking to meet men between the ages of 21 and 40.
View Profile
sbo123sss
I'm a 30 year old man looking to meet women between the ages of 25 and 45.
View Profile
bloodmoney370
I'm a 43 year old man looking to meet women between the ages of 30 and 50.
View Profile
GastFR
I'm a 39 year old man looking to meet women between the ages of 25 and 39.
View Profile
Mpeks
I'm a 22 year old man looking to meet women between the ages of 18 and 30.
View Profile
Terror000
I'm a 28 year old man looking to meet women between the ages of 25 and 45.
View Profile
Henry071
I'm a 28 year old man looking to meet women between the ages of 25 and 35.
View Profile
Thulani1234
I'm a 42 year old man looking to meet women between the ages of 27 and 45.
View Profile
IceTy
I'm a 42 year old man looking to meet women between the ages of 18 and 42.
View Profile
Dayo78
I'm a 36 year old man looking to meet women between the ages of 20 and 50.
View Profile
Gemini24
I'm a 45 year old man looking to meet women between the ages of 30 and 45.
View Profile
Jb24golf
I'm a 40 year old man looking to meet women between the ages of 32 and 38.
View Profile
bigbhele
I'm a 34 year old man looking to meet women between the ages of 18 and 55.
View Profile
hawk619
I'm a 44 year old man looking to meet women between the ages of 35 and 45.
View Profile
loner729
I'm a 40 year old man looking to meet women between the ages of 25 and 45.
View Profile
Chacal
I'm a 44 year old man looking to meet women between the ages of 30 and 40.
View Profile
Jabz_0
I'm a 29 year old man looking to meet women between the ages of 25 and 36.
View Profile
Siyabulela90
I'm a 24 year old man looking to meet men between the ages of 25 and 45.
View Profile

Business Directory