Last week the IMF downgraded its global growth forecast.The organisation said:
The global economy has deteriorated further since the release of the July 2012 WEO Update, and growth projections have been marked down. Downside risks are now judged to be more elevated than in the April 2012 and September 2011 World Economic Outlook (WEO) reports. A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component. The answer depends on whether European and U.S. policymakers deal proactively with their major short-term economic challenges. The WEO forecast assumes that they do, and thus global activity is pro- jected to reaccelerate in the course of 2012; if they do not, the forecast will likely be disappointed once again. For the medium term, important questions remain about how the global economy will operate in a world of high government debt and whether emerging market economies can maintain their strong expansion while shifting further from external to domestic sources of growth. The problem of high public debt existed before the Great Recession, because of population ageing and growth in entitle- ment spending, but the crisis brought the need to address it forward from the long to the medium term.
World GDP growth is expected to be just 3.3% for 2012. That’s down from the 0.2% that was expected. Growth in advanced economies is expected to be just 1.3%.
But did the IMF bottom-tick global growth?
Today we got economists increasing their estimates.
Here’s Nomura on the US:
The control group for retail sales is an input into estimating consumer spending within GDP. The stronger-than-expected increase of 0.9%, coupled with upward back revisions, has led us to revise our Q3 GDP tracking estimate upwardly by two-tenths of a per cent to 2.0% from 1.8% previously. Despite the stronger-than-expected increase in September retail sales, real personal consumption remains on the track for q-o-q annualized growth below 2% in Q3. A soft labour market has made households more cautious and household spending continues to track the meager growth in wages and salaries.
And Xinhua reports that the Chinese money supply is starting to grow aggressively again, with M2 growing at the highest rate since July 2011.
Combine a US and Chinese pickup with any kind of improvement in Europe — certainly possible with the tail risk coming off the table — and it may turn out that the IMF bottom-ticked this one.