Bank of Ireland: Global recession 'probably over'

The global recession appears to be over, according to Bank of Ireland's latest bulletin published today.

The bank said it was now evident that a number of key Asian economies recorded positive growth in the second quarter, including China, Japan, Singapore and Hong Kong.

The pace of contraction in the larger Western economies slowed considerably in Q2, with most now generally expected to record positive growth in the current quarter, according to the bulletin.

“On that basis, the global economy probably bottomed around June, and it is not surprising that forecasts for 2009 and 2010 are being revised up," said the bank's chief economist Dr Dan McLaughlin, author of the bulletin.

"The IMF now believes that the global economy will expand by 2.5% next year, against a 1.9% forecast published in April, and the consensus view is higher still, at over 3%."

Mr McLaughlin said it was as yet unclear in what form a recovery would take place, and how this would impact monetary policy worldwide, but said it was clear that the loss of output due to the downturn meant that inflation was unlikely to be a problem any time soon.

"Central banks are unlikely to rush to raise rates and it may be of comfort to borrowers that when rates do rise it will be in an environment in which policy makers are confident that an upturn is well and truly established," he concluded.