The Scotsman – Look at the Year Ahead
14 December 2009
Going into 2010, much of the global economy remains fragile and in need of continued government support. In many countries it has even been deemed necessary to extend fiscal support packages beyond their scheduled span, and extremely accommodative monetary conditions are largely still in place. Despite this broad range of policy support none of the major economies looks strong enough to do without that support, and there will be additional challenges next year. There will be the ‘nice’ judgement of when it will be safe to wind down some of the accommodative policy measures, but there will also be the complication of political uncertainty. We have already had a ‘political’ pre-Budget report ahead of next year’s UK general election and there are likely to be similar machinations ahead of the US mid-term elections later in the year. Consequently, policy decisions will not be wholly driven by economic criteria. And the financial system is still not fully functional as its efforts are focused more on rebuilding their capital base than extending loans. This all suggests that economic growth will generally be less robust than would be expected in the year following recession. However, this should not be a surprise given the excesses and imbalances that were allowed to develop over the middle years of the last decade.
Douglas Roberts, Senior International Economist – Global Strategy, Standard Life Investments
This article was first published in The Scotsman on Saturday 2nd January 2009.
