Page last updated at 23:10 GMT, Thursday, 16 April 2009 00:10 UK

Are there any signs of recovery?

Barack Obama
President Obama warned that a full recovery was not imminent

With the US and the world economy facing economic slowdown, President Barack Obama has said that he sees some signs of recovery. Meanwhile in the UK the Chancellor Alistair Darling is likely to have to revise downward his economic forecast in next week's Budget.

But how real are these signs, and how long will the recession last?

BBC News has asked some of the world's leading economists for their views.

"I think we are at an inflexion point, where output is still falling, but the rate of decline is slowing.

This should put us halfway through the recession, which means that we should be in recovery by the spring of next year.

I think there are signs of things stabilising everywhere you look, from house prices to the stock market to commodity prices, which is one of the best predictors of global recovery.

Fairly soon, we should be seeing the green shoots. One reason I am confident of recovery, compared with the 1930s, is the size of the global stimulus being applied the world economy.

And if a recovery does begin, the UK will be one of the best placed to take advantage of it, because of the fall in the value of Sterling."

Dawn Holland, senior research fellow, NIESR

"I think President Obama's comments were wishful thinking. It is too early to see any green shoots of recovery in the world economy, and we may not see any signs of growth until 2010.

Until then, we expect rising unemployment and falling output, but the falls may not be as sharp as the declines we have seen in the last two quarters. It all hinges on the attitude of the markets to risk, and how much they are prepared to start lending again to businesses and individuals.

At the moment there is little sign that this has improved, but perceptions could change quickly. That means that there is a high degree of uncertainty in any forecast."

Andrew Simms, director, New Economics Foundation

"I think this is the earliest point at which politicians think they can start talking up the economy without being ridiculed. They are trying to rebuild confidence but it is really a self-fulfilling prophecy.

But in many ways the recession is just beginning to work its way through the economy - we haven't yet seen the full effect of rising unemployment.

In fact we may be facing a new form of a recession, that could dance on the edge of depression, if resource constraints - food and oil shortages - are combined with the bursting of the credit bubble.

The government's efforts to create a 'green New Deal' have lacked any real commitment of resources or new policies so far."

Kenneth Rogoff, professor of economics, Harvard University

"I think the US faces a decade of recession, similar to what happened in Japan.

We are not going to be 'off to the races' any time soon in any of the countries that were the 'ground zero' of the financial crisis, such as the US, the UK, Ireland and Spain.

Neither Britain or the US has really fixed the problems in their financial sector, and it is hard to see really robust growth returning in the next few years.

It is in the interest of policy-makers and politicians to trumpet any green shoots in order to encourage investment and talk up the market, but it is very unclear whether they really exist.

The huge government spending is providing a temporary boost to the economy, but it will have to be paid for in higher taxes or higher inflation which could reduce economic output in the future."

Peter Morici, professsor of economics, University of Maryland

"President Obama is grasping at straws.

We have had some mixed data in recent months but hard indicators like retail sales and industrial production have turned sour again.

I think we will see some mild recovery by the fourth quarter of this year, but we are in for a double-dip recession in 2011 and 2012 unless we take drastic action to fix the structural problems in the economy.

These include a broken banking system, rising unemployment, energy dependence, and the trade imbalance, especially with China.

The Obama administration has not tackled these issues head-on because its advisors are too close to Wall Street.

We could be in a Great Depression like that in the 1870s that produced a quarter-century of slow growth."

Barry Eichengreen, Professor of Economics, University of California, Berkeley

"I am not among those who believe in green shoots, because for green shoots to grow they need watering - with liquidity from the banking system, which is not currently able to provide it.

I fear that the attempt to get the private sector to recapitalise the banking system is whistling in the dark, and ultimately the government - if it can get Congress to agree - will need to put in another large sum of money.

If it doesn't, the recovery could 'bathtub-shaped', with weak or no growth persisting for several years. And without a functioning banking system, the effects of any fiscal or monetary stimulus are much weaker."



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