Deutsche Bank Revises Global Economic Growth Outlook Higher

Deutsche Bank AG has revised its global economic growth outlook higher for the first time since the downturn began. However, it said the trend pace of growth would likely be low and economic conditions remain volatile.

Peter Hooper, and economist at Deutsche Bank, said in a note that global growth was now expected to rise 2.5% in 2010, compared to their March forecast of 2%.

Mr. Hooper said:

The upward revision is due entirely to better prospects for industrial countries, where growth next year is now seen reaching 1% compared to 0.3% before.

He said most of the upward revision to the outlook was due to a stronger outlook for investment growth. He said investment growth has risen to 2% from 0.1%, while export growth is up to 4.1% from a decline of 2.2%.

He said:

The improved prospects for exports and investment reflect greater confidence in the effectiveness of authorities’ efforts to restore stability in the financial sector.

Mr. Hooper said there had been two key driver to the global economic and financial crisis. The first was the breakdown of the global growth model of the past decade, which led to unsustainable international current account imbalances. The second, was the financial crisis, which ensued when the inability of debtors to repay their creditors became evident.

As a result, we can expect to see lower trend growth and higher economic volatility, the opposite of what the world economy experienced during the era of the Great Moderation.

Comments

[conceptwizard:]

Government spending and increased debt has been taken on by all countries and to in part pay for that taxes will rise everywhere. Deficits will hit records as far as the eye can see. You can’t have massive spending, massive debt and massive tax increases and expect to have growth. It is impossible.

Thus far government has been able to paper over the systemic meltdown in the financial area. They still haven’t dealt with off balance sheet and derivative losses. Even with the trillions poured into these entities it has not been enough to solve their problems and over the next few years that will become obvious.

The main cause of the problem is leverage, securitization, and globalization and the massive use of derivatives. Free trade and globalization are the worst and have caused wage-price imbalance and stripping America of its ability to compete.

The advantages all accrue to transnational conglomerates and third world nations. This enriches the rich and takes the living standards in the US, Canada and Europe down to the levels of the third world.

Jun 30 05:14 PM