Confidence in world economy down: survey

Confidence in the world economy dropped for the first time in four months in July as government stimulus efforts showed little sign of reducing job losses, a Bloomberg survey of users on six continents showed.

The Bloomberg Professional Global Confidence Index declined to 39.13 in July from 43.57 in June. A reading below 50 means pessimists outnumber optimists. A measure of US participants' confidence in the world's largest economy fell to 29.5 from 36.7.

"No one can wave a magic wand," said David Semmens, an economist at Standard Chartered Bank in New York and a regular survey participant. "The economic outlook isn't improving as strongly as people would have hoped."

The MSCI World Index is down about 2 per cent since the US Labour Department on July 2 reported higher-than-ex-pected job losses and an unemployment rate approaching 10 per cent. Treasury Secretary Timothy Geithner said on July 14 the world will probably suffer "more than the usual" setbacks in exiting the recession.

The survey of more than 2700 Bloomberg users was conducted between July 6 and July 10. Since the previous survey, the International Monetary Fund and the World Bank lowered their forecasts for global growth this year, while leaders from advanced nations say the recovery is too fragile to consider reversing more than US$2 trillion ($3.1 trillion) in stimulus efforts.

The US lost 467,000 jobs last month and Vice-President Joe Biden said the administration "misread the economy" when it predicted unemployment would peak at 8 per cent once the stimulus package was passed. President Barack Obama said the jobless rate, now at 9.5 per cent, will "tick up" over the next several months.

In Asia, respondents were more optimistic, with the index rising to 59.4 from 58.2. More signs of recovery are emerging in the region, where improvements in industrial output, higher government spending and domestic demand are buttressing economies.

- BLOOMBERG