GLOBAL - Invesco's group chief economist John Greenwood has predicted a reviving world economy in Q2, 2002 on the heels of a recovering US economy.
He told a press conference held in Hong Kong yesterday that he also expected one more 25bps rate cut from the Fed on January 30. However, because the strength of the US upswing will be limited by consumer and business indebtedness, he does not expect any robust new spending on consumption or capital expenditures.
“I expect a US recovery starting in Q2,” said Greenwood. “The chance of another rate cut is now high, and I would expect that to be the last rate cut in the current cycle. Another rate cut would encourage faster spending growth in the US, and an earlier recovery in Asia.”
Greenwood retained a moderately optimistic outlook for 2002, and believed the recovering US economy will percolate to other economies, led by a resurgent technology sector.
“We think the technology sector will again lead, and that those economies most closely connected to the US will recover quickly,” Greenwood elaborated. “A further rate cut by the Fed will encourage an earlier recovery in Asia.”
Commenting specifically on Hong Kong’s situation, Greenwood said that Hong Kong has nothing to fear from short-term depreciation of Asian currencies, in particular a weakening Yen.
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