LONDON - The world's richest economies are set to grow faster this year than forecast a month ago, although the latest Reuters economic outlook showed the upturn will be feeble in comparison to resurgent emerging market peers.
The monthly survey of around 250 economists showed upward revisions to full-year 2010 growth forecasts for the United States, the euro zone and Japan, but in most cases they still foresaw a marked dip in the pace of growth during the first quarter.
That looked set to keep most central banks on hold until after the middle of 2010, they said.
The varying fortunes of fourth quarter GDP data clearly influenced respondents. Surprisingly strong annualised growth of 5.7 percent in the U.S. for the period prompted a new 2010 full-year growth forecast of 2.9 percent, up from 2.7 percent.
In Britain, disappointing 0.1 percent growth over the same period moved forecasters to downgrade their 2010 forecast to a 1.1 percent expansion from 1.2 percent last month.
The kind of figures you've seen in the U.S. clearly are not necessarily representative of what we should expect for the year ahead -- there's a sense that a number of factors behind them will be transitory, said Nomura economist Laurent Bilke.
Respondents cited still-high unemployment and weak credit as restraints to growth, as well as the gradual easing of some of the vast state stimulus pumped into the euro zone and British economies.
I don't think the picture has really fundamentally changed in the past month or so -- we definitely still have very strong volatility in the macroeconomic indicators, said Bilke.
That contrasted with the latest consensus for China, which forecasts growth of 9.5 percent this year, or the Brazilian finance minister's promise of a 5.2 percent expansion.
The last Reuters global growth poll, conducted in January, predicted world growth of 3.6 percent this year compared to 2.5 percent in July's survey.
RATES STAYING LOW FOR NOW
Economists said the U.S. Federal Reserve wouldn't start tightening interest rates until the third quarter, with the European Central Bank and Bank of England following suit in the fourth quarter. Japan, which remains stuck in a fierce battle against deflation, will not raise rates for at least the next 18 months.
By contrast, Asian central banks will likely have to hike their rates by September as growth and inflation picks up faster than predicted earlier, a Reuters poll from January showed.
Also concerning G7 central banks is the withdrawal of stimulus measures. While this process is advancing in the U.S., respondents gave a small but significant 25 percent chance that the Bank of England would seek to extend its 200 billion pound quantitative easing programme.
Worries over sovereign indebtedness in southern euro zone countries provides an added risk there, said Nomura's Bilke.
Poll respondents gave a one-in-four chance of Greece needing a financial bailout from the EU or IMF, and speculation about debt levels in Spain, Portugal and Italy have rattled markets in the last week.
(Polling by Bangalore Polling Unit, Additional reporting by Stanley White, Jonathan Cable, Ross Finley; Editing by Patrick Graham)