Global economy weekahead: No winners in race for growth medals

Sun Jul 22, 2012 6:47pm EDT
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By Alan Wheatley, Global Economics Correspondent

LONDON (Reuters) - "Faster, Higher, Stronger" is the motto of the Olympics opening in London on Friday. "Slower, Lower, Weaker" would be a better description of the economic performance of many of the countries competing in the games.

None of the big names will look worthy of a place on the podium if forecasts for a raft of data due this week from the euro zone, the United States and Britain prove accurate.

Even China, the long-standing growth champion, is huffing and puffing.

And for all the growth hormones injected in the form of cheap central bank money, the global economy is likely to be running on the spot for some time yet given fears that the United States could fall off a fiscal cliff, the softer trend in China and, above all, the debilitating euro zone crisis.

July's advance surveys of purchasing managers in the 17-nation single currency area, due on Tuesday, are expected to produce readings well beneath the boom-bust mark of 50, signaling recession. At best, the reports will show both manufacturing and services are at least stabilizing.

Two other important early glimpses of how the third quarter is shaping up, Germany's IFO business climate and Belgium's leading indicator, are scheduled for Wednesday and are forecast to show a modest deterioration.

"Risks to the economic outlook and to the euro zone sovereign situation are stacked on the downside, and we see a significant probability of a rate cut by the ECB within the next three months," said Riccardo Barbieri, chief European economist at Mizuho in London.

HEAVY GOING   Continued...