Is global growth gaining momentum?
Global economy is gaining momentum again despite some analysts still seeing a probable double dip scenario. This is shown by the latest economic indicators.
Retail sales in US rose at 0.4% pace in august, better than expected, giving us a good signal about consumption recovery in an economy that depends more than 2/3 on this variable. Also industrial production verified growth in August. All these numbers have taken place in a low inflation context increasing chances of more monetary policy easing by the Federal Reserve.
This week's data about housing sector could be crucial to impulse the latest economic recovery seen in the US.
Parallelly, China has shown that it has enough fuel to feed global economic growth. Retail sales has grown 18.4% year over year in August, assuring that domestic demand will continue strong and that's a good news for global production. Besides, industrial output expanded at a 14% pace in the eight months of the year, above economists expectations.
In the other part of the world, Latin America, things really look good. In the first half of the year, average economic growth for the region was about 8% due to higher soft commodities prices. The second part of the year will have smaller growth, but strong anyway.
Global financial markets are betting against a double dip scenario. The main threat actually is the debt problem in some European countries such as Greece, Portugal and Ireland.