The global economy is about to turn the corner, leading central bankers said on Monday, and their cautious optimism was backed by data showing growing signs the economic and financial crisis is abating.
China said its efforts to boost economic growth were working and surveys showed business confidence creeping back in other major emerging and European Union economies.
Yet for many, economic recovery may take a long time to arrive: EU and U.S. businesses are set to cut more jobs in the coming months and banks are still absorbing the impact of bad debts from the financial and economic crisis.
Leading central bankers meeting at the Bank for International Settlements in Basel summed up the qualified hopes.
"We are as far as growth is concerned around the inflection (turning) point in the cycle," said European Central Bank President Jean-Claude Trichet. "In certain cases you see already a picking up (in gross domestic product). In other cases you see that it continues to fall but at a lower pace…
"One has to remain alert because we are in uncharted waters, even if we are around the inflection point and even beyond in certain parts of the global economy," said Trichet, who is chairing the BIS meeting.
Some evidence the worst may be over came from crude oil imports data on Monday that showed a spike in demand in China, whose rapid growth into one of the world's biggest economies was powered by global demand for its manufactured goods until the rapid downturn last year.
Deputy Central Bank Governor Su Ning told a financial conference: "China's economy is expected to sustain rapid growth for some period in the future."
The country's Prime Minister Wen Jiabao told state radio the government's response to the financial crisis went far beyond its $585 billion stimulus and suggested it would be rolling out new initiatives throughout the year.
Growing optimism about the U.S. economy was underlined on Sunday by an influential survey of private forecasters predicting it would resume growth in the third quarter. But the panellists surveyed in the Blue Chip Economic Indicators newsletter also predicted that U.S. unemployment would peak only in the first quarter of 2010.
The Organisation for Economic Co-operation and Development issued its leading indicator for March, which fell to 92.2 from 92.4 the previous month, giving a 9.5 point drop year-on-year. However, it said the pace of decline in the world's major industrialised and emerging economies is easing, particularly in China, France, Italy and Britain.
WAY TO GO
Surveys of services sector firms in the European Union and the four major emerging economies — Brazil, Russia, India and China — showed an increasing number forecasting growing business and revenues in the next 12 months.
Even so, employment levels may still have some way to sink in the European Union, the surveys sponsored by accountancy firm KPMG found.
"Much as we hesitate to talk of green shoots when employment expectations and other contributors to consumer confidence remain poor, the survey has a number of hopeful features," Mike Stevens at KPMG said of the EU survey.
"The bad news is that almost all sectors and all countries surveyed (UK, Germany, France, Italy, Spain and Ireland) expect a decline in employment and capital spending and most countries expect a fall in profits, though to a lesser extent than six months ago," Stevens added.
Industrial output fell more sharply than expected in March in both France and Italy, official data showed on Monday, with Italian production tumbling 4.6 percent month on month and French output down 1.4 percent.
Global stock markets have rallied in recent weeks on hopes the U.S. economy will start growing again later this year and that banks were getting back on their feet after the industry was caught in the worst financial crisis in six decades.
Shares held steady on Monday, working on their third consecutive month of gains, but there were losses in Europe after recent gains and Wall Street looked set for a poor start.
HSBC, Europe's biggest bank, said first-quarter profits were "well ahead" of last year, swelled by record results in its investment bank, but would have been down without accounting gains on its debt.
U.S. Treasury Secretary Timothy Geithner told Reuters Television on Friday that fears of a catastrophic financial meltdown were waning. But he too struck a cautionary note, saying there was still "a long way to go" before credit conditions could be considered normal.
