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Risk Of Major Recession Receding Says Top Economist
Posted: 16.03.2007
The risk of a US or wider recession is receding according to leading economist Sir David Walker who takes an optimistic view of future global market stability.
Sir David, senior adviser to Morgan Stanley, said none of the other major world economies seemed likely to face a recession either.
Speaking at a meeting of the Global Economy Forum of the Cambridge University Land Society chaired by Douglas Blausten of Cyril Leonard Sir David said that despite the equity market turbulence of the last couple of weeks he remained optimistic about their future too.
It was much less likely that a collapse of the kind seen recently would lead to large scale cross infection over a sustained period. ?If recent market turbulence causes a phase of circumspection that will be no bad thing,? he said.
But Sir David pointed to social and political tension ahead in some areas. The reduction in the share of the rewards of globalisation going to labour while the share going to global company profits was at a record high was not sustainable.
Trade unions were in decline everywhere and there had been a doubling in the labour supply of the developing world. This meant the pendulum of political power had swung to the left in the US, France, Germany, Spain, Italy, Japan and Australia.
A big risk to the global economy also came from protectionism. This was ?massively significant? and was now a serious threat to jobs and incomes. In the US China bashing was going from bad to worse.
The UK had enjoyed more of the benefits and less of the tensions of globalisation and a booming China and India because of the UK?s wider service base, developments in commercial real estate investment and cross border activity.
He said a major underpinning in the development of the real estate industry in the last five years had been the development of deeper, broader capital markets. Many of the long term structural factors in the economy looked set to continue.
Global GDP had risen at more than 3.5% a year for each of the past three years. It was the first time since the 1970s that variability in that growth between different world regions had fallen very sharply. These outstanding economic results were plainly tied very closely to the emergence of China and India and other developing markets ? itself a factor hugely to the benefit of the UK. |
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Douglas Blausten, senior Partner of Cyril Leonard, (left) with Sir David Walker, senior adviser Morgan Stanley.
Douglas Blausten, senior Partner of Cyril Leonard, (left) with Sir David Walker, senior adviser Morgan Stanley.
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