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Global economy stable, but risks remain

Global economy stable, but risks remain article image
The global economy has moved on from the stabilisation phase and is now looking at growth, believes Roger Donnelly, chief economist at the Export Finance and Insurance Corporation (EFIC). In EFIC's August World Risk Developments newsletter, released today, Donnelly says debate has centred on the speed and length of the cyclical recovery, and the strength of the growth path. On cyclical recovery, opinion divides into two camps: those who say rapid and sustained (‘V-shaped’) versus those who say slow and hesitant (‘U’ or ‘W-shaped’) - Donnelly worries that the slow-and-hesitant camp may prevail. He further notes that the global recovery remains prone to three downside risks: premature withdrawal of policy stimulus before private demand becomes self-sustaining; sluggish global rebalancing of import/export trade; and the risk of China's lending boom backfiring.

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