We are getting more and more signs that the global economy is starting to improve. As expected, indicators in Asia and the US are showing the strongest signs of healing. In particular, surveys of new orders have risen in both areas recently. This is in line with our expectation that the US and Asia will be the first regions to start a recovery phase. Apart from survey data, other indicators are also pointing to improvement: US retail sales have started to rise after a period of strong decline, car sales globally have improved recently and housing data has improved. In Asia, exports and industrial production is starting to increase. Japanese companies, which have taken the biggest blow to production, are now planning to increase production in March and April. For more leading indicators, see our Global Business Cycle Monitor out today. Risks to growth forecasts are changing at the moment from strong focus on downside risks to upside potential; that the recovery comes faster and stronger. Remember that the fiscal stimulus is only starting to hit the global economy and will provide a strong boost in coming quarters.
We still see plenty of bad news and this is likely to be part of the picture for a long time. In this context it is important to distinguish between leading and lagging indicators. Global unemployment is likely to rise sharply for the rest of the year. But job losses normally come with a lag and hence the rise in unemployment is partly an effect of the weakness we have behind us and does not say much about the future. If that were the case we should never have experienced any recoveries because unemployment always rises strongly during recessions. Other lagging indicators are bankruptcies. We expect to continue to see a sharp rise in bankrupt-cies over the coming year. Rising unemployment and bankruptcies leave the economy fragile and vulnerable to new shocks and setbacks. But it is normally not a hindrance for a recovery to take off.
