Surging inflation pressures and the natural disasters that ravaged Japan last month look unlikely to stall an ascendant global economy, a Reuters poll of around 350 economists showed on Thursday.
The survey of analysts from all over the world again showed the United States leading a rich-world recovery along with Canada, while respondents expect a jumble of strong and weak performances from the top European economies.
The world's third largest economy, Japan, will likely contract this quarter after the March 11 earthquake and tsunami that left nearly 28,000 dead or missing, also triggering a nuclear crisis that could last for months.
While economists are still digesting the ramifications of the disaster on global supply lines, many pointed to surging oil prices as the key risk for now.
"We've taken down our global growth forecasts over the last quarter very slightly, and that's on the back of higher oil prices," said Karen Ward, senior global economist at HSBC in London.
"The oil price impact is a net negative for the global economy, particularly for the United States. In the developed world, where wage growth is so weak, it already has dented U.S. consumer confidence and it will be an issue for consumer confidence elsewhere."
The poll showed global growth at 4.2 percent this year and 4.3 percent next year — unchanged since the January poll.
That was just slightly less optimistic than the International Monetary Fund's forecast on Monday of 4.4 percent for this year. The IMF said oil prices and inflation posed new challenges to the progress of the world economy.
Just as finance ministers from the Group of 20 rich and emerging market nations meet in Washington, the latest Reuters survey showed rich-world economies will lag far behind India and China, which will see near double-digit rates of growth in 2011.
G-20 finance ministers will be hoping to make progress on a plan to identify the countries that put the global economy at risk — but that could be tricky with a fast-diverging array of economic policies and prospects.
Canada and the United States should lead the rich world recovery in 2011 with annual average growth rates of 3.0 and 2.9 percent, respectively. Even rising inflation pressure is unlikely to dent this view in the case of the U.S. economy.
"Inflation is going to be higher than most expect, but I do expect it to moderate some in 2012," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York. "Does this mean there is a genuine threat to the recovery? No."
On Monday, Brent crude hit a 32-month high above $127 a barrel, pushed higher by unrest in oil producer Libya. While it has since fallen, the commodity and energy rallies since the start of the year haved sent gauges much higher, especially in Europe and emerging countries.
The Japan poll of around 30 economists showed the economy flatlining in the first quarter and declining 0.6 percent between April and June.
While they see the economy rebounding in the third quarter once the reconstruction effort gets into full swing, the nuclear crisis and consequent energy shortages will depress the economy for the next few months.
"Not only exports, but private consumption will decline. And unstable power supply will probably prompt companies to postpone capital spending," said Junko Nishioka, chief economist at RBS Securities.
"Also a possible power shortage in the summer is seen weighing on consumer sentiment and pulling down spending, which could drag into the latter half of the year."
The Bank of Japan, which was already struggling to escape deflation before the disaster, will keep rates on hold until at least 2013.
The euro zone, which has already seen an interest rate hike this month in response to above-target inflation, will see mixed fortunes among its biggest economies.
While Germany could rival the growth rates expected of the North American economies with a 2.8 percent expansion this year, economists see the French economy growing 1.7 percent this year and Italy lagging behind with just 1.1 percent growth.
"Higher inflation and significant fiscal tightening will continue to constrain the recovery despite the resurgence in global manufacturing," said James Nixon at Societe Generale.
Overall, the 17-nation euro zone economy will expand around 1.7 percent this year, the poll showed.
Forecasters trimmed their 2011 U.K. growth forecasts for the third month running, as Britons toil under the strongest levels of inflation anywhere in the G-7 and fierce austerity measures.
Economists see British economic growth of just 1.5 percent this year, underperforming most G-7 economies.
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