Economists increasingly bullish on GDP forecasts

ANOTHER respected economist has joined the growing tally of experts raising their growth forecasts for the coming year, after a raft of improved economic data injected a note of optimism into the City.<br /><br />Howard Archer, chief European and UK economist at IHS Global Insight, now believes GDP will contract by 3.7 per cent this year and grow 0.5 per cent in 2010.<br /><br />The predictions are markedly more bullish than at the end of last month, when he expected the economy to contract by around 4 per cent in 2009 and to remain flat overall in 2010.<br /><br />But Archer warned that sustainable improvement in the economy is some way off at present, due to the continuing obstacles of tight credit conditions and sharply rising unemployment.<br /><br />&ldquo;Economic activity is currently benefiting from much-needed inventory correction being largely complete,&rdquo; he said.<br /><br />&ldquo;However, for sustainable recovery to develop there needs to be a clear ongoing improvement in final demand and we are dubious that this will happen for some time to come.&rdquo;