BoE's Sentance pins global recovery on Asia

The worst of the global economic crisis appears to be over, although the speed and depth of the recovery will depend on whether Asia can become a "true engine of global growth", the Bank of England's Andrew Sentance said on Sunday.
Writing in the Sunday Times, the policymaker said the world will need Asian countries to increase consumer spending and investment rather than just meeting demand in the United States and Europe.
If China, India and other Asian economies raise consumption, growth will probably be stronger around the world, inflationary pressures will rise and central banks will have to raise interest rates more quickly, he said.
However, if Asia looks to export markets for growth and the US and European economies continue to be held back by weakness in the financial sector, growth is likely to be disappointing, inflation won't rise and rates will be low "for a prolonged period".
"At this stage, it is not possible to predict with any certainty which scenario will unfold," wrote Sentance, who sits on the rate-setting monetary policy committee of Britain's central bank.
"The prospects for global recovery depend on whether Asia can become a true engine of global growth, not simply by meeting demand originating in America and Europe but propelled by consumer spending and investment in this key region."
Most advanced economies are showing signs of a "bottoming out" and the downturn has eased significantly in the United States and euro zone, he added.
BRITISH GROWTH IN 2009:
Britain's economy, which is mired in its worst recession since World War Two, should see a return to growth in the second half of 2009, he added.
As well as global factors, the current constraints on bank lending are the other "big uncertainty" hovering over the speed and strength of the recovery, Sentance said.
But there are grounds for optimism in Britain, he said. The stock market has risen strongly since March, the falling housing market "appears to be turning", consumer and business confidence have "recovered significantly" and the shock of the banking crisis is fading, he said.
Low interest rates, a competitive exchange rate, government tax and spending measures, the Bank's quantitative easing programme and an improved global economy have all played a part in boosting the UK economy, he said.