Europe’s currency crisis and China’s slowing growth won’t derail what’s emerging as a sustainable but uneven recovery, economist Nariman Bahravesh said Wednesday.
The probability of a mild double-dip recession is “no more than 20 percent,” Bahravesh, chief economist at IHS Global Insight, said in a Webcast sponsored by his firm.
Bahravesh said rising domestic demand is playing a bigger role in Asia and to a lesser extent countries in Latin America, the Middle East and Africa. He said this will help insulate them from external economic shocks.
He said he expects the Chinese government to succeed in managing inflationary pressures and a real estate bubble and that the appreciation of the yuan will be gradual enough to avoid wild swings. “China is very good at engineering soft landings,” he said.
The impact of the euro crisis “is likely to be small on the rest of the world,” perhaps shaving one-tenth of one percent off the growth rates of economies in the U.S. and other developed countries. He said global GDP growth, which topped out at 5.3 percent in 2007, is likely to be no more than 4 percent this year.
Bahravesh said U.S. GDP growth is expected to be around 3.5 percent this year and about 3 percent in 2011 and 2012.
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