Economic Outlook: A global perspective

Asian and European stock markets moved modestly higher Friday, adding to tangible signs the global recession is beginning to fade.

Globally, the recovery is uneven, but investors are taking note of stronger performances in the second quarter with some countries able to declare the downturn has ended.

Technically, it takes two consecutive quarters of negative growth to enter a recession, but positive numbers are taken at face value, because you can't call 0.3 percent growth posted by France and Germany in the second quarter a recession anymore. Similarly, Hong Kong put in a solid 3.3 percent growth spurt in the second quarter. South Korea and Singapore also pushed into positive territory. In China, the Tiger Woods of the industrial world, what looked like a slump never came close to negative numbers.

Others showed enough improvement to give hope the recession was waning. Economies of the 27-member European Union shrank 2.5 percent in the first quarter and 1.2 percent in the second. In the 16-member eurozone, economic output shrank 2.5 percent in the first quarter and 0.4 percent in the second. In the United States, a 6.4 percent first quarter drop improved to a 1 percent drop in the second.

Furthermore, next year will be different, European Chief Economist Thomas Mayer at Deutsche Bank told The New York Times.

With stimulus spending still pushing growth in the United States next year, "that will be when the U.S. bounces back more quickly than Europe," Mayer said.

With their economies heavily based on banking, Hong Kong and Singapore were in positions to stage comebacks quicker than most. Following that lead, countries that maintained or improved export business with Asia are doing relatively better than others.

Countries that rely on domestic demand are not as happy these days, Nick Kounis, European economist at Fortis Bank told the Times. "It's a gradual recovery story rather than a robust V-shaped rebound," he said. "Domestic demand is likely to stay subdued because of weakness in the labor market and because wages are still relatively high and have room to decline."

In Washington, while overseeing an economy highly dependent on domestic demand, the Federal Reserve this week left bank-to-bank interest rates at zero to 0.25 percent, but announced it would pull back from a program to buy $300 billion of government bonds, the first retreat from a rescue effort in two years.

U.S. Treasury Secretary Timothy Geithner put his stamp of approval on the recovery, saying banks that led the world into disarray were not in position to do so again.

"The big banks are running with much less leverage now, much more conservative liquidity cushions, there's been a significant shrinking of their balance sheets, getting rid of bad assets and cleaning up. And the weakest parts of the system don't exist anymore," he said.

In Asia Friday, Japan's Nikkei 225 reached a high point for the year, gaining 0.76 percent to close at 10,597.33. The Hang Seng index in Hong Kong rose 0.15 percent. The Singapore Straits Times index rose 0.66 percent, while the S&P/ASX in Australia rose 0.57 percent.

In midday trading in Europe, the FTSE 100 in Britain rose 0.5 percent, while the DAX 30 in Germany rose 0.55 percent. The CAC 40 in France gained 0.69 percent, while the pan-European DJStoxx 600 added 0.5 percent.