Forecasts throw doubts over global prospects: official

PUBLISHED : Friday, 21 September, 2012, 12:00am
UPDATED : Friday, 21 September, 2012, 2:46am

Prospects for the global economy remain uncertain in the face of lower growth forecasts, a senior mainland transport official said yesterday.

Xu Zuyuan, vice-minister at the Ministry of Transport, noted that the International Monetary Fund expected 3.5 per cent growth in the global economy this year, a figure lower than the 2011 result. At the same time, the World Trade Organisation's estimate of a 3.7 per cent rise "was lower than the average of the past two decades".

"Even now we are not fully certain about the global economy. In Europe the economic recovery is not at all solid," Xu told the World Shipping (China) Summit. "We really are faced with challenges, but we have to remain optimistic."

Emerging economies such as Latin America and the Middle East could take up some of the slack left by advanced economies, Xu said. But, for China, increasing domestic consumption would be the dominant trend.

Also at the summit, ABN Amro senior economist Maritza Cabezas forecast that European economies would grow by 0.2 per cent next year compared with a 0.5 per cent contraction this year. By comparison China's economy would expand by 8 per cent next year, buoying global growth of 3.5 per cent in 2013.

Cabezas said the European Central Bank's decision to start buying sovereign bonds would buy time for heavily indebted countries such as Spain, and make them structurally stronger. However, the debt crisis had taken its toll on foreign investment flows in Europe, she added, and a flight of foreign holders of government bonds had particularly affected Spain and Portugal.

Senior bankers and maritime executives were more bullish about long-term prospects, predicting a surge in world growth and trade volumes over the next 40 years, helping to fuel the development of new trade routes.