Greenspan appears less concerned about recession risks
Former Federal Reserve chairman Alan Greenspan played down his earlier concern about a possible US recession, saying the world economy would provide a cushion, according to people attending a forum in Tokyo yesterday.
Greenspan said growth in the rest of the world is creating demand for services from companies such as Microsoft Corp, according to Vaseehar Hassan Abdul Razack, chairman of Kuala Lumpur-based RHB Islamic Bank Bhd, who attended the meeting, hosted by Nomura Research Institute Ltd. Greenspan was speaking via satellite from Washington.
Greenspan in late February and early March predicted that US economic growth might stagnate, a view at odds with those of Ben S. Bernanke, his successor, and other Fed officials.
In a March 5 interview, Greenspan said there's a "one-third probability" of a recession this year and the current expansion wouldn't have the staying power of its decade-long predecessor.
The former Fed chairman didn't mention recession yesterday, according to Anne Okko, who works in funding administration at the Nordic Investment Bank.
Okko said Greenspan said the world economy is on a positive trend.
"The change in his view highlights how changeable sentiment has been since the start of the year," said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.
"He seems more optimistic that the world economy can provide support to the US."
Policymakers at the Federal Reserve last month questioned their forecast that inflation would recede, according to minutes of the bank's March meeting released last week, reviving the prospect of interest-rate increases.
The global economy will grow by 4.9 percent this year, following a 5.4 percent expansion in 2006, the International Monetary Fund predicted last week.
The IMF said the US would grow 2.2 percent this year, down from 3.3 percent in 2006.
Bloomberg News
(China Daily 04/17/2007 page16)
