Jean-Claude Trichet signalled on Monday that the global downturn hadbottomed out with some large economies already able to put therecession behind them and look forward to renewed growth.
The European Central Bank president’s comments on Monday in Basel,Switzerland, had added weight because he was speaking on behalf of theworld’s leading central bankers, not just for the eurozone.
His remarks came as the Organisation for Economic Co-operation and Development said there were signs of a “pause” in the economic slowdown in France, Italy, the UK and China.
The tentative signs of green shoots across the global economy havealready led to a 40 per cent increase in global equity prices since thetrough in March, according to the FTSE All World ex Japan index.
Therehas also been a rise in business and consumer sentiment in recentweeks, as orders have begun to return and levels of unsold stock havebegun to subside.
As recently as late April, the world's central bankers andfinance ministers were still extremely cautious when they gathered inWashington and the International Monetary Fund said the global economywould contract sharply this year and recover only sluggishly in 2010.
Lastweek Mr Trichet had warned that in the 16-country eurozone "economicactivity was likely to be very weak for the remainder of this year,before gradually recovering in the course of 2010".
On Monday,however, Mr Trichet struck a much more optimistic note, ditching hisprevious refusal to spot green shoots for fear that they might soonwither and die. The global economy was "around the inflection point",he said, with some countries "being beyond the inflection point".
"In all cases we see a slowing down of the decrease in GDP. In certain cases you see already a picking up," Mr Trichet said.
Butthe depth of the downturn already endured was still evident in officialdata released on Monday that showed Italian industrial production fell4.6 per cent in March, leaving output almost 24 per cent below a yearearlier, while French industrial production also fell 1.4 per cent inthe same month.
Economists expect the eurozone economy to haveshrunk by 2 per cent to 2.5 per cent in the first quarter,significantly worse than declines in the US and UK already published.
But according to the Paris-based OECD, these severe declines in economic output across the world are moderating.
While the organisation said the latest signals from a wide rangeof surveys and market indications pointed to a continued "strongslowdown" in the OECD area, which encompasses the world's advancedeconomies, "the pace of the deterioration is easing".
Source: Financial Times