UN agency sees no early recovery from recession: Global economy outlook ''better'' than expected: central bankers

United Nations economists said on Monday there would be no early recovery from global recession and warned that any move to ease back quickly on government stimulus programmes could make the crisis worse. In its annual report, the UN trade and development agency UNCTAD also urged the creation of a new world reserve system using several currencies rather than just the US dollar, and called for tough controls on cross-border financial flows.
"The likelihood of a recovery in the major developed countries that would be strong enough to bring the world economy back to its pre-crisis growth path in the coming years is quite low," the report said. At a news conference, UNCTAD Secretary-General Supachai Panitchpakdi and senior aide Heiner Flassbeck were dismissive of suggestions that "green shoots" of recovery had been emerging in wealthy economies this year. "We don''t see any real rebound," said Supachai, former head of the World Trade Organisation and one-time deputy prime minister of Thailand. "There is no sign of a strengthening of underlying economic factors."
UNCTAD''s conclusions ran against fresh economic figures and surveys that suggested economies in the United States and Europe may be on the mend, with Chinese manufacturing also picking up speed. "The synchronised rise in a wide range of markets that do not normally move in the same direction shows that what we have been seeing in the first half of the year is driven by speculation," Flassbeck told reporters in Geneva.
"What is going on is speculation on a recovery, an attempt to anticipate a recovery. But it is a fiction, it is not there yet," he said. "It would be very dangerous if governments start talking about exit strategies from stimulus policies." The global economy is stabilising and the outlook is better than previously expected, leading central bankers said after a meeting on Monday.
"It''s already known a number of projections have been slightly revised up, confirming that we probably are ... out of the period of freefall which had marked the last quarter of last year and the first quarter of this year," said Jean-Claude Trichet, speaking on behalf of the G10 top central bankers. "That is something which seems to be confirmed at the global level - stabilisation, better projections than previously anticipated," he added.
In recent weeks, a whole series of data has pointed to an overall improvement in the global economy but officials have been cautious, warning that any recovery remains fragile while unemployment is still rising. Trichet noted that the central bankers from industrialised and emerging economies meeting at the Bank for International Settlements agreed that "we were observing a confirmation of some better indicators than previously anticipated."
However, the central bankers also urged "prudence." "We have to remain prudent and cautious that it is not excluded that we will have a bumpy road ahead and that alertness remains of the essence," Trichet said. "We are not yet at the level of functioning of global finance that we can consider normal," he added.
Trichet, who is also president of the European Central Bank, cited complacency as a risk, noting that it is "extremely important that ... we are doing all what is necessary" to prevent a repeat of the crisis. He also pointed to other risks, including protectionism, as well as imbalances - domestic and external - that plague the global economy.