Oliver's Insights - Has growth peaked? What is the risk of a double dip?
17 June 2010 - This note looks at the risk of a double dip in global economic activity.
The key points are as follows:
-
Some leading indicators of global economic growth are showing a loss of momentum, fuelling talk of a double dip back into recession. However, some loss of momentum in growth indicators was inevitable.
-
Double dips are rare and apart from Europe there hasn’t been the sort of policy tightening that could drive a fall back into global recession.
-
Shares often go through a rough patch in the second year after a bear market ends, but providing we are right and a double dip doesn’t eventuate, then resumption of the cyclical recovery in shares and other growth assets is likely. Share market action over the last few weeks suggests that this might already be underway.
