World economy fires up with rate hikes expected

GLOBAL economic recovery is back on track, according to a world survey released yesterday.

After a slight decline at the end of 2010, the measure of the economic climate “has risen markedly,” reaching its highest level since the end of 2007, the Munich-based Ifo think tank said.

Both the current situation and the six month outlook have improved, it said, with the headline indicator “now clearly above its long-term average.”

And expectations that interest rates will increase in the coming six months have risen “nearly everywhere,” the survey said.

Central banks are expected to tighten policy in response to rising price pressures in “nearly all countries.”

On average for the world, a price increase of 3.4 per cent is expected for 2011, in comparison to 3.1 per cent for the previous year. In western Europe prices are expected to rise by two per cent.