Global economy: U.S. and China leave feeble Europe in their wake

Sun Jan 6, 2013 3:52pm EST
 
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By Jeremy Gaunt

LONDON (Reuters) - The economies of the United States, China and much of the developing world have decoupled from Europe, leaving it to wallow in various stages of recession and fiscal disarray.

That is one reason why the key economic event of the coming week will be a European Central Bank meeting almost totally focused on how far policymakers will go to boost growth.

Although there are some signs that a bottom may have been reached in the euro zone's recent economic decline, the pattern of moderate U.S. and Asian growth book-ending feeble Europe is firmly in place for the moment.

Manufacturing surveys published just a few days into 2013 laid out the divide starkly.

The United States and China both came in above the 50 index level that designates growth while the euro zone languished in recessionary territory for the 17th month in a row.

The December U.S. jobs report last Friday also did nothing to dispel the idea of recovery, although the prospect of more wrangling over the U.S. budget still casts a shadow. The dollar has even begun to rise on the distant prospect of an exit from years of stimulus.

"From a growth outlook, it is quite hard for Europe to disappoint," said Michael Metcalfe, responsible for global macro strategy at State Street Global Markets.

He argues that one of the main risks to the current global economic consensus is that there is too much gloom attached to Europe.   Continued...

 
A homeless man sleeps in downtown Lisbon December 19, 2012. REUTERS/Rafael Marchante