GLOBAL CONDITIONS IMPROVE
NEDBANK SAYS – in its latest Guide to the Economy – the upswing in the global economy has gathered momentum, helped by some normalisation in spending and financial markets. The ongoing effects of the inventory cycle, as well as stimulatory Government and central bank policies, will last into the second half of this year. However, the recovery is still vulnerable to setbacks.
THE GERMAN ECONOMIC survey institute, the IFO, has found the world economic climate survey has rebounded sharply. That ties in with economic growth figures, which also show recovery is taking place. However, growth hasn’t been uniform, with the developing world outpacing developed countries. The recovery in the developed world continues to be led by the world’s largest economy, the United States.
IN THE UNITED STATES, consumer spending has recovered by more than anticipated over recent months, outstripping income growth as households again dipped into their savings. However, Nedbank says bank lending remains very weak, suggesting the credit-fuelled recoveries of the past are unlikely in this cycle. Although employment is improving, the US’s unemployment rate is still high at 9,7%.
CHINA’S FISCAL and monetary stimulus was remarkably effective in fostering growth last year, with the economy expanding by 8,7% for the year as a whole. That was above its government’s 8% growth target, an objective that seemed too optimistic at the start of 2009. Nedbank says China’s resurgence was a major factor in stabilising the global economy and it remains vitally important.
CAR EXPORTS BENEFIT
NEDBANK POINTS OUT that South Africa’s motor vehicle exports have benefited from the global recovery. As the graph shows, year-on-year growth in vehicle exports has rebounded strongly. However, exports as a percentage of total vehicle production are still down. Overall, SA’s export growth has accelerated strongly, helped mainly by some restocking in industrialised countries and demand for commodities from China.