World shakes off its hangover
It has taken almost a decade, but the world economy is finally beginning to enjoy a broad-based upswing.
It has taken almost a decade, says The Economist, but the world economy is finally beginning to enjoy a "broad-based upswing". In emerging markets, Europe, Asia and America, "all the fires are burning at once". In the US, confidence indicators ranging from the National Federation of Independent Business's survey of small business optimism to the University of Michigan consumer sentiment poll are on the up, as the FT points out.
In Europe, activity surveys are at a six-year high. Global bellwethers such as Taiwanese manufacturers and South Korean exporters have a spring in their step too, with the latter up 20% year-on-year last month. The commodities uptick has bolstered emerging markets. In Brazil and Russia, recessions are ending and both countries look set to add to global GDP. The improved macroeconomic backdrop is bolstering corporate optimism, says Fidelity's Tom Stevenson in The Sunday Telegraph.
A Fidelity survey suggests that company managers are increasingly confident of rising consumer demand, so they are "finally opening the spending taps again". A sustained rise in business investment has hitherto been conspicuous by its absence, and it bodes well for further growth and earnings.
Eight years may seem a long time to wait for a proper recovery from the financial crisis, but research suggests it's par for the course, says The Economist. Research covering 100 banking crises shows that it takes that long for incomes to return to pre-crisis levels. Loose monetary policy, rapid balance-sheet clean-ups, and occasional fiscal stimulus eventually deal with the nasty hangover. But don't breathe a sigh of relief just yet. Populism and protectionism could cause a relapse.