FRANKFURT, July 13 – Some hard data is now underpinning prospects for a global economic recovery, but world leaders urge caution and at least one says the worst is still to come for some.
So should we perk up and head for the high street, keep cash ready under the bed, or prepare for long, hard times?
Some sample figures released this week gave reason for hope.
In the United States, the world\’s biggest economy, key jobless claims fell to a six-month low point, and a four-week average seen as a better indicator also declined.
In Germany, the biggest European economy and a top global exporter, industrial orders and output soared in May, catching analysts by surprise.
And the International Monetary Fund raised forecasts for growth in China, the world\’s third-biggest economy, to 7.5 percent this year from 6.5 percent, as well as those for the US and Japan, number two worldwide.
Germany, Japan and the US are all believed to be at the bottom of their worst recessions since the bitter battles of World War II.
That\’s the good news.
But leaders of the Group of Eight agreed meanwhile that a full economic recovery was not waiting around the corner, US President Barack Obama said on Friday.
"We agreed that full recovery is still a way off, that it would be premature to begin winding down our stimulus plans," Obama told a post-summit press conference.
And World Trade Organisation chief Pascal Lamy said: "The worst of the crisis in social terms is still to come, which means that the worst of the crisis in political terms is still to come."
Other examples of seeing the glass half-empty or half-full were provided by two Paris-based groups, the International Energy Agency and the Organisation for Economic Cooperation and Development.
The IEA said: "Over the past two weeks the mood has suddenly changed, as many leading economic and energy indicators continue to show very weak readings."
But the OECD reported the same day that some leading global economies showed signs of improvement in May, raising the chances of recovery.
For many analysts, the key factor in determining how things will go is a single word: credit.
"The credit outlook is the main threat that may yet turn the scant recovery we expect into a worst-case credit nightmare," UniCredit economists wrote.
Barclays Capital economist Thorsten Polleit told AFP: "Credit is drying up and it\’s very unlikely that it starts flowing again as easily around the globe as it did a couple of years ago," a phenomenon now seen as a principal cause of the crisis.
Germany\’s finance minister warned of a "very serious" threat of a credit crunch later this year and its economy minister added: "We must prepare for difficult times and we must do it very soon."
The European Central Bank will invest 60 billion euros (84 billion dollars) into low-risk corporate bonds to boost business finance, and banks have been warned they could be sidestepped later if necessary to ensure more credit got to the overall economy.
On an industrial level, Polleit said the end of the credit boom "is going to change the production structure of major economies substantially."
The economist explained that "by generating ever-greater doses of credit," the global monetary system had a "formative impact on … the kind of jobs that were created, on the kind of products people were buying."
He observed: "This is now subject to a correction."
A global recovery is nonetheless likely, though most analysts use terms such as fragile, modest or subdued to describe it.
In Eastern Europe, which sent a chill westwards when countries like Hungary pleaded for bailout funds last year, "the risk of nasty surprises has been clearly receding during the last three months," IHS Global Insight economist Ralf Wiegert told AFP.
"Some countries like Poland look pretty good" now, he said.
Banks are in better shape than after the US investment giant Lehman Brothers collapsed in mid September, owing to massive aid and loans from governments and central banks, but little of the windfall cash has reached businesses.
"It is still unclear how the monetary stimulus is going to be passed on to consumers and investors," Deutsche Bank economist Gilles Moec told AFP.
A second key recovery factor was how goverments managed stimulus packages which have prevented the global recession from becoming a depression, he added.
"There\’s a very fine line for governments to walk" between allowing swollen public deficits to drive up long-term lending rates, and implementing "exit strategies" too soon and choking off growth.
"If there is a mistake either way it will be bad news," Moec said, observing that his bank expected a "moderate" recovery.
He also said it was crucial for government stimulus measures to be replaced eventually by sustained growth from within the economic system.
"We have to make sure the recovery evolves from a policy-induced recovery to an endogenous recovery," Moec said. "That will be the main hurdle for next year."
Spanish central bank governor Fernandez Ordonez urged everyone to avoid hasty conclusions on how to foster a rebound.
"There is a Chinese proverb that says we cannot say that a man was happy before the last day of his life. We should probably take the same precautions to discuss resolution of the crisis," Ordonez advised.