China and India will lead the way in the coming global economic recovery thanks to huge government stimulus and infrastructure spending, according to the Conference Board of Canada’s latest global outlook.

Even though China has not yet spent its entire four trillion yuan stimulus package, its gross domestic product is expected to expand by close to 10 per cent this year, after a gain of 8.5 per cent for 2009.
India’s economy will continue to benefit from ongoing infrastructure spending and, combined with an expected boost in tourism revenues from the Commonwealth Games in Delhi, should lead to GDP growth of 7.6 per cent in 2010.
On the flip side, recovery in Europe is still in the early stages and solid gains in GDP are not a given this year, the report said. GDP in Western Europe declined by 4.1 per cent in 2009 and a sliver of growth of 1.2 per cent is expected this year.
Overall, the world economy is set to expand 2.9 per cent this year, after shrinking 2.2 per cent in 2009, according to the outlook.
“While this is good news, recovery will remain tepid compared to the level of growth that normally follows a steep recession,” said Glen Hodgson, the Conference Board’s chief economist. “We won’t see more normal growth rates for the world economy until 2011 or 2012.”
The worry in western Europe remains as banks in the U.K., Ireland and Spain continue to cope with meltdowns in residential real estate.
Troubled loans to eastern Europe are also a concern for many of the region’s banks.
Germany and France have been the first countries to emerge from recession, while Spain and Ireland are still dealing with the bursting of their housing bubbles, with their GDP expected to decline again in 2010.
Latin America has weathered this global storm much better than past downturns and is poised for above-average growth of 3.6 per cent in 2010.
(Source: thestar.com)