Recovery Drawing Closer, says G10

08 January 2002

Economic recovery may be on the way, according to the central banks from the Group of 10 countries.

Bank of England governor Sir Edward George, chair of Monday’s summit of G10 bank governors and deputies in Basel, revealed that the outlook was brighter than at the last meeting in November.

“The situation in the short term remains relatively weak, but in contrast to two months ago, there were certainly some signs of a prospective recovery beginning to emerge,” said George, speaking on the central banks’ behalf.

News from the US, he continued, was “more mixed and modestly encouraging”, not least improving confidence and changes to inventories. The G10 believes the American economy bottomed out around the end of 2001: “As we go through the year, hopefully we will see the recovery.”

George also acknowledged that the Eurozone’s economy was “pretty flat”, and admitted this could continue well into the New Year before an upturn.

Other pluses include the apparent limitation of Argentina’s economic chaos, which does not seem to have spread elsewhere, plus a forecast of 7% growth this year for China and positive signs in South Korea’s high-tech sector. However, Japan faces “continuing stagnation”, with considerable structural reform required before recovery.

Nevertheless, George insisted that recovery was not inevitable, and may not be swift.

News source: Financial Times