by Zheng Qihang
BERLIN, Dec. 17 (Xinhua) -- The U.S. economy will not completely get back on track until 2015, and the world economy's recovery will be bumpy, a German economist said.
"Between now and 2015, there will be a lot of dissatisfactions, a lot of disappointments about the United States and in the United States," Norbert Walter, Deutsche Bank's former chief economist, told Xinhua in a recent interview in his office in Bad Soden, a town near Frankfurt.
Walter toned down previous forecasts of a 4-percent growth of the U.S. economy. "The trend growth of the U.S. economy is 2 percent, not 4 percent," he said.
However, U.S. politicians and scholars seemed unwilling to accept a lower growth rate for a while to consolidate their economy and achieve financial balance, Walter said. "They fear that a weak dollar would hurt voters' confidence," he said.
Walter criticized the U.S. government's inflation policies. "They cannot possibly get out of such difficulties by printing money, because if Americans pursue inflation policies, other savers of the world will not invest more money in the U.S. dollar," he said.
WORLD ECONOMY FACES SLOW RECOVERY
Commenting on world economy, Walter said 2010 has been a year of stabilization and recovery in which the emerging markets have shown surprising surges. The expert predicted 2011 won't be a bad year in terms of growth rate, but the growth of Japan, the United States and Europe would slow down.
However, he voiced worry about 2012. "2012 could be a difficult year. We could go back to very very low rate of growth, and probably we could again debate as if a recession is at risk," Walter said.
The possibility of high growth rate in emerging countries translating into high inflation may end the low interest rate policies those countries have seen so far, Walter said, adding that currency wars, trade wars, and protectionism could wreak havoc.
ON EUROPEAN DEBT CRISIS
Walter was not so worried about the eurozone debt crisis as the capital market. He said those economies in trouble are relatively small-sized compared with big powers in Europe, which are still in good shape, and that many European countries have adopted the right policies to consolidate their economies.
"In my view, the rating of the importance of Greek and Irish capital markets for the euro is very misplaced. Greece is not even 3 percent of Europe's GDP. Ireland is even less. If big countries like Italy or Spain were in trouble, it would be more serious," he said.
"Quite a lot of politicians in Europe have done the right thing," he said, mentioning Greece, Italy and Britain, which have taken serious measures to cut deficits or restore their economic balances.
Walter said the new European Union (EU) summit to be held in Brussels Thursday would continue the debate, as the plan endorsed at the last summit was incomplete.
EU leaders endorsed a plan at the last summit in October to improve economic governance in the 27-nation bloc, aiming to avoid sovereign debt crisis in the future through tougher fiscal discipline and closer economic coordination.
He said "Mr. Euro" Jean-Claude Juncker's recent proposal of issuing euro bonds is "bold," but headed "in the right direction."
He suggested euro bonds should only be issued on condition that countries receiving the bonds give up part of their sovereignty on policies. "They have to accept advice from Brussels for better politics," he said.
Walter also thought it's necessary to change the Lisbon Treaty in order to avoid sovereign debt crisis in the future. However, "this is very difficult as the EU now has 27 member states," he said.
He even suggested reaching a transatlantic agreement between Europe and the United States because a unilateral measure from Europe cannot totally solve the problem. "It has to be underpinned by a change in the American attitude to deal with capital market issues. So we should have an agreement, a transatlantic agreement on different treatments of sovereign bonds," Walter said. "I believe we exactly need that in order to get out of the crisis as well."
Walter has served as Deutsche Bank's chief economist from 1990 to 2009. Now he has opened a consulting company with his two daughters.