Economic forecasts are brightening for the second half of 2006.
A Reuters report on the Blue Chip survey on the US economy:
Top economic forecasters expect U.S. economic growth to accelerate in the second half of 2005 but the consensus outlook for 2005 and 2006 was unchanged from July, according to a survey released on Wednesday.
Economists surveyed by the Blue Chip Economic Indicators newsletter forecast inflation-adjusted U.S. gross domestic product will rise 3.6 percent in 2005 and 3.3 percent in 2006.
But the newsletter said the recent bullish flow of economic data may well see these expectations pushed higher over the coming months.
The pace of the expansion has picked up steam into the second half of this year, with consensus forecasts from the August 3-4 Blue Chip survey showing an acceleration in growth to 3.9 percent in the third quarter from 3.4 percent in the previous quarter.
The Bank of England also seems to be forecasting a recovery in economic growth in the UK, according to this FT report.
The Bank of England’s quarterly inflation report on Wednesday signalled that the UK central bank was unlikely to embark on further interest rate cuts in the near future...
Analysts said the report was more hawkish than expected by forecasting a recovery in UK economic growth to rates above the economy’s long-running trend rate in the years 2006 and 2007 after a patch of weaker growth this year...
Based on current market expectations for interest rates, GDP growth would climb up to an annual rate of above 2 per cent by the end of this year before rising more strongly further ahead than predicted in the last inflation report in May.
Meanwhile, the IMF reports that Japan's near-term economic outlook has improved, according to Reuters.
The near-term outlook for Japan's economy is improving although an aging population and slow underlying economic growth pose medium-run dangers, the International Monetary Fund said.
In its report prepared July 29 and released Monday, the IMF also welcomed a plan to privatize Japan's postal system -- an effort defeated in parliament earlier on Monday, prompting Prime Minister Junichiro Koizumi to call a snap election.
The fund said Japan's economy has performed well so far this year, with recent indicators of retail sales, investment plans and employment growth heralding further expansion ahead. However, mild downward pressure on prices has persisted.
But high oil prices -- US light sweet crude futures hit US$65.00 a barrel yesterday -- are expected to drag down growth in the rest of East Asia, according to an Asian Development Bank report.
With the external economic environment turning somewhat less favorable and oil prices reaching record levels in nominal terms, East Asia is expected to experience a moderate slowdown this year. Available data for GDP and exports for the first half of this year already point to a slowdown, although with considerable variation
The ADB report may be getting a bit dated, though, particularly on the external economic environment. Singapore's Ministry of Trade and Industry issued a more upbeat outlook yesterday.
Moving forward, the outlook in the second half of the year has improved. Continued growth in the G-3 economies, a tentative recovery in the global electronics industry, limited impact from higher oil prices and stronger domestic forward looking indicators, together signal better prospects in the next six months...
Stronger domestic forward-looking indicators suggest that growth momentum would continue for the rest of this year. The latest business expectations survey reveals that sentiments in both the manufacturing and services have improved. In view of the improved outlook, the Ministry of Trade & Industry has narrowed the 2005 GDP growth forecast to 3.5-4.5 per cent.
Sustained growth in the second half of 2005 appears to be in the bag. It's time to look more closely at the outlook for 2006.