Germany's Dekabank Forecasts Global Growth Will Slow in Coming 18 Months

Dekabank Deutsche Girozentrale, the fund manager for Germany’s state-owned savings banks, projects global economic growth will slow in the next year and a half as governments’ stimulus programs expire and companies complete the restocking of inventories.

The speed of the economic recovery in the first half of 2010 can’t be maintained, Frankfurt-based Dekabank said in a study published today. The current momentum is driven by expansive monetary policy and companies filling up inventories. Both of those factors will diminish gradually, the bank said in the study.

“One mustn’t be blinded by the latest good numbers,” Ulrich Kater, chief economist at Dekabank, said in an e-mail. “There are difficult economic challenges ahead, such as supervising the stability of the financial system and a cautious consolidation of public budgets.”

Dekabank projects global annualized growth will slow to 3.5 percent in the current quarter from 4.5 percent in the previous three months. Fourth-quarter expansion is projected at 4 percent followed by 4.3 percent growth in each of the two subsequent quarters and 4.1 percent in third and fourth quarters of 2011.

Dekabank sees only a slight possibility for a double-dip recession in the world economy. The European sovereign-debt crisis, the impact of which can be felt at a global level, came at a “favorable point” in the economic cycle. Nonetheless, the debt crisis and restrictive credit conditions are risks to global growth, according to the bank’s study.

“With nervous capital markets in the background, one can never be safe,” Kater said.

Dekabank forecasts global expansion for 2010 of 4.5 percent and 4 percent for next year.

To contact the reporter on this story: Simon Berberich in Frankfurt sberberich@bloomberg.net

• Tweet
• More
  • Business Exchange
  • Buzz up!
  • Digg
• Print
• Email