Jan Friederich, global forecasting director, Economist Intelligence Unit, says there's a better global economic outlook coming on the back of the stimulus packages. Excerpts:
Give us your reaction about all the news coming from China and the US that have taken the equity markets so much higher.
It is becoming clear that we will no longer see declines in GDP growth for the next few quarters. A lot of what we are getting in terms of positive implementation has already been influenced quite strongly by the stimulus factors here in Asia and the region, and also in the US and Europe.
If you look at the PMI of China yesterday, it starts with a one-year high. Has a genuine bullishness found its way into commodities?
There was a very sharp rundown in commodity inventories during the start of the downturn. This indicates an increase in demand from China for commodities, simply a restocking or bringing back the stock to reasonable levels. Once the reasonable levels have been reached, the pace of increase of imports of commodities will decline substantially.
What's your outlook on currencies?
At the moment, the story is very much that the dollar is suffering. When people see a decline in the world economy, particularly people living in the US, they will put more money in assets outside of the US. A bit later, in 2010, people could become more concerned about the drawback of the monetary and fiscal stimulus packages.
The other thing is that the skeletons in the financial industry are quite likely to bring financial and corporate organisations under heavy pressure. That will also lead to a new risk aversion.
