Asia's economic recovery is losing momentum and Europe's slump is proving deeper than expected, raising concerns that soaring stock markets globally have jumped ahead of economic reality.
Excerpt:
China still has scope for fiscal stimulus if need be but Beijing has hit the "Phillips Curve" constraint, discovering that the trade-off between growth and inflation is becoming much harder to manage.
Fitch Ratings says total credit has jumped from $9 trillion to $23 trillion over four years, adding as much as the entire US banking system. This is yielding ever less growth. Stimulus is leaking into property and rising prices instead.
Xianfang Ren from IHS said: "The government's policy challenge this year is to strike a balance between containing the asset bubble and pushing the economy out of the growth malaise."
Sceptics say the global market boom has been driven by a wash of liquidity from the US, UK, Japanese and Swiss central banks, abetted by China's shadow banking system, with the Draghi pledge to save Italy and Spain icing the cake…
Full article: Sputtering global economy belies stockmarket boom – Telegraph.
