Risks and Concerns Remain as Global Economic Recovery Continues

Deloitte's second quarter Global Economic Outlook confirms that the global recovery has begun, but risks and concerns remain.


“As the fog lifts over the global economy, a recovery is clearly under way. Strong economic growth is evident in such disparate places as China, the United States, Brazil, Australia, and India. Yet as good news envelopes the globe, new fears emerge, such as higher interest rates, troubles with the euro, and concern with the overall health and stability of the global financial system, leading to considerable debate and disagreement over whether the recovery can be sustained,” states Ira Kalish, Director of Global Economics, Deloitte Research.


While the trouble in Greece raised questions about the future of the euro, the study highlights that the outcome of the current financial fiasco could actually strengthen the currency through reformed rules and governance.


Closer to home, in Japan, there’s an export- and inventory-led recovery, but its outlook for domestic demand is less encouraging, notes Deloitte, adding that reduced stimulus is likely to slow private consumption and GDP growth.


Over in China, strong economic growth is expected to continue for the rest of the year due to a successful policy response.


But Deloitte warns there are serious risks, and China will have to shift growth away from export dependence toward domestic demand.


In India, the economy will likely grow rapidly in 2010, despite problems in the agricultural sector, says Deloitte. In the longer term, while there are some risks, India is most likely headed for an extended period of relatively strong economic growth.


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