Momentum fading for global economic growth and inflation: poll

Thu Jan 14, 2016 10:13am EST
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By Rahul Karunakar

BENGALURU (Reuters) - Economic growth is losing momentum across emerging and developed economies as is inflation, with trouble in China now the biggest worry for 2016, according to the overwhelming majority of hundreds of economists polled by Reuters around the world.

That comes despite several trillion dollars' worth of stimulus and ultra-easy monetary policy from major central banks over the last half decade, and coincides with a growing sense of fear that is gripping world financial markets.

The benchmark S&P 500 U.S. stock index closed below 1,900 for the first time since September on Wednesday, crude oil has fallen over 70 percent since mid-2014 to below $30 a barrel and U.S. 10-year Treasury bond yields are back to two-month lows.

Elwin de Groot, senior market economist at Rabobank, warned that the world could no longer rely on China for support, as it did after the global crisis erupted on financial markets in 2007-08 and spread to developed economies.

"One of the lessons learned from past crises is that one ought to take the market seriously. Very seriously. From that viewpoint the start to the year is a screaming warning sign," he said.

"One reason why the market is watching China so intensely is that all big economic regions have their own issues, so a weaker China means no spender of last resort."

Throughout the years of crisis and recovery, the world's second largest economy has helped to cushion the world economy through breakneck borrowing and infrastructure spending which has only recently begun to taper off.

Concerns about China's slowdown easily topped the list of what hundreds of economists said they were most worried about for the global economy this year, even though a majority said the risk of a global recession this year is "insignificant".   Continued...

A labourer walks on scaffolding at a residential construction site in Qingdao, Shandong province, China, November 18, 2015. REUTERS/China Daily