This month’s issue of the Export Finance and Insurance Corporation (EFIC) newsletter, World Risk Developments, discusses an interesting tension that has arisen in the world economic outlook.
Many leading and coincident indicators of national and by extension world economic activity are delivering moderately pleasant surprises, prompting forecasters to upgrade their guesstimates of growth for 2010 and 2011. Yet at the same time, doubts about the ability of Greece, and to a lesser extent Portugal, Spain and Ireland, to finance their large budget deficits and public debts is casting a pall over the eurozone outlook, and again by extension the world outlook.
The newsletter notes that the latest prominent forecaster to revise up its numbers is the International Monetary Fund (IMF). It is now forecasting world GDP growth of 3.9% in 2010, up three-quarters of a percentage point from its October forecast. ‘Meanwhile, and astonishingly, however, sovereign CDS spreads for Greece have become larger than those for Russia, the Philippines and Indonesia’, says Export Finance and Insurance Corporation (EFIC)’s chief economist Roger Donnelly.
In other stories, the newsletter looks at overheating concerns in Vietnam, credit upgrades and oil price vulnerability in Indonesia, credit upgrades and economic resilience in Turkey, and the post-election outlook for Sri Lanka.