A glimmer of light

After the economic turmoil of the year just closing, markets are hungry for any crumb of comfort economists can throw their way.

Although investors are well aware that economic forecasting is barely more scientific than reading tea leaves, news that the International Monetary Fund (IMF) believes the threat of a world recession has diminished slightly is an encouraging glimmer of light.

There are many provisos in the IMF prediction, but it follows on from other signs which suggest that this region, at least, may have turned the corner. One particularly bright spot is its upgraded estimate for the Chinese economy, lifting the forecast in October from 5.5 percent to 7.2 percent for this year, and 6.6 percent for next year, an increase of 1.1 percent from its previous figure. Economically, the mainland appears to be doing everything right, which is good news for Hong Kong and offsets the difficulties posed to the SAR's economy by the drop in the value of neighboring currencies.

On the global front, the focus is turned to the Russian crisis, a continuing paralysis in the Japanese financial system, and a raft of uncertainties confronting the United States, after an extended period of seemingly unstoppable growth.

The U.S. trade deficit is set to widen next year, with talk of a trade war looming with Japan and possibly China. Profits are down in the corporate sector, and a flurry of mergers and takeovers make the economic situation less stable.

For Russia, political instability, raging crime, workers who have not been paid for months, nonpayment of foreign debt and an increasingly angry population faced with the rigors of a harsh winter, are just some of the problems being faced.

But of all the risks threatening the global economy, it is Japan's delayed reforms which are the most intractable. How much longer will Tokyo drag its feet?

-- The South China Morning Post, Hong Kong