Economists have nudged up their 2004 growth forecasts for most of the world's major economies and expect the United States to grow faster than fellow members of the Group of Seven industrial nations, a Reuters poll showed.
Forecasts from around 160 economists, surveyed January 12-19, pointed to improving industrial production and falling unemployment in G7 countries, but noted that currency fluctuations and bulging deficits could still hurt the recovery.
In the world's largest economy, the United States, growth of gross domestic product (GDP), adjusted by Reuters for international comparisons, was forecast to reach 4.7 percent this year. The original, annualised forecast was 4.2 percent.
A Reuters poll last October put US GDP growth at 3.9 percent on an adjusted basis.
"Once again the global recovery is being led by the US," said Trevor Williams at Lloyds TSB in London.
However, economic imbalances remain a concern. The US budget deficit is put at around four percent of GDP this year and expected to shrink only a little in the following 12 months.
Forecasts for Canada have been revised down since October's survey amid worries that a strong Canadian dollar could take its toll on the export-dominated economy.
Economists have shaved their Canadian GDP growth forecast for 2004 to 2.9 from 3.0 percent on an adjusted basis, but the smallest G7 economy is still seen growing faster than its European counterparts.
EURO ZONE STILL LAGS: "The euro zone as a bloc...will recover from last year's abysmal 0.4 percent, but it will continue to lag the recoveries that are occurring elsewhere," said Williams at Lloyds TSB.
The euro zone as a whole is seen growing 1.8 percent in 2004 - up from the official forecast of 0.4 percent growth in 2003, but still well below the pace of the United States, Canada, Britain and Japan.
"There are two main reasons (for euro zone under-performance) compared to the US - weakness in domestic demand and much lower productivity growth," said Luigi Speranza at BNP Paribas in London.
Falling inflation could lure cautious European consumers to finally part with some of their cash, but any pick-up in domestic consumption will probably be gradual, economists said.
In Japan, GDP recalculated by Reuters to give a full-year 2004 average was seen rising 2.5 percent in 2004 - nearly double October's forecast - but deflation in the world's number two economy was seen persisting this year and next.
"More or less, the euro area and Japan are in the same situation, facing the same kind of risks from the foreign sector, from the appreciation of exchange rates," said Gianluigi Mandruzzato at Banca Intesa in Milan.
"(But) the structural problems of the Japanese economy are much deeper, so eventually the growth rate will not be much lower, if lower at all, for the euro area compared to Japan."
Forecasts for 2.7 percent growth in Britain were unchanged from the previous poll, and economists said its economy should become more balanced during the course of the year.
"We should see a bigger contribution to growth both from business investment and from the trade side," said Ross Walker at RBS Financial Markets in London.
Comments
Comments are closed.