IT’S OVER

Barclays has declared an end to the global recession.   I’ve summarized the note below:

• June is likely to have been the last month of the US recession, and April the last in Germany’s recession.

• The pace of improvement in labour markets in the US and euro area points to upside risks to the strength of the recovery.

• We believe the recovery is sustainable into 2010 and that there is a strong case against a “W” shaped path.

• Large policy supports remain in the pipelines and should help dampen the negative wealth effects that are burdening the global consumer.
• The global recession is over, the resilience of emerging markets has surprised to the upside.
• We believe that June was the last month of the recession in the US and April the last in Germany …and that the case against a “W” shaped recovery is strong.
• Monetary and fiscal policy is still providing substantial support to the global economy.
• The recovery that started in Asia in February has truly become global

Developed Economies

US: The recession is dead; long live the recovery.  Recent data reinforce our view that the US recession ended in June, and we have raised our Q3 09 growth forecast to 3.5%.

Euro area: Recession dating.  While evidence is accumulating that the German and French economies stabilised during Q2, conditions remain very weak in southern Europe.

UK: The economy turns, the MPC goes straight on.  Activity data this week suggested that the economy is emerging from recession, but the MPC chose to increase its QE injections.

Japan: Less-jobs recovery.  We have revised up our April-June real GDP growth estimate to 4.4% q/q saar from 3.1%. Policy supports account for much of the revision and strength of these figures.

Emerging Markets
China: A slowdown in new loans is expected.  We expect July data releases to show faster y/y growth in IP, fixed asset investment and retail sales and an improving m/m increase in exports.

Emerging Asia (ex-China): India waits for the rains. Despite robust domestic demand, an uncertain monsoon outlook is a risk for India.

EMEA: It’s all about the growth.  Next week’s Q2 GDP data are likely to show how significant the contraction was in H1.  However, higher frequency data signal an improvement in growth dynamics.

Latin America: Back to square dancing.  After a synchronized recession and the growth diversity that followed it, most countries in the region are again moving in the same direction, this time for the better.

The global recession is over, the resilience of emerging markets has surprised to the upside