The paper is based on the outline of following points How solid is the recovery and will world economic growth rates return to pre-crisis levels? Short term outlook for the world iron ore market The medium to long term outlook: two scenarios How solid is the recovery? MF has revised its GDP projections upwards as is shown in Fig. 1 But a large part of demand comes from stimulus packages. Fig.3 shows it. However what happens when they run out? EU27 public deficit, % of GDP The recovery may be long and hesitant Even in China, capital investment is growing faster in the state controlled part of the economy than in the private sector The upturn in developed countries may be choked off because stimuli are cut prematurely due to fears of growing debt or inflation Lack of coordination increases the risk of a slow recovery Lack of credit will act as a brake, more so if state borrowing squeezes out private investment and more stringent bank capital rules reduces lending
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