Speaking to Innovative Investor at the 13th annual Asian Investment Conference, Giles Keating, head of research for private banking at asset management at Credit Suisse, claimed the global recovery is becoming more sustainable, despite lacklustre stock market performance.

Innovative Investor: What is the global economic growth outlook at the moment?

Giles Keating: We do see the global economic recovery as pretty robust. We think the risk of a 'double dip' [recession] in the US or elsewhere is very low. If anything we think growth over the next several months would surprise on the upside, particularly in Europe where I think people have become excessively gloomy. The likelihood is that Germany over the next couple of quarters could see some very strong growth. We think economic expansion is broadening out to be based less on the inventory cycle and more on consumer spending and on investment spending by companies.

Innovative Investor: What about the equity and commodity markets?

Giles Keating: We see them somewhere near to fair value. The rise over the last 12 months has taken them from being chronically undervalued to being round about 'at fair value'. Given this and what I just said about the economy, we think the trend in stock markets will be up over the next 12 months. Of course there will be volatility along the way but we do think the trend is upwards. The same goes for commodity markets, although it is a more sober outlook for fixed income markets.

Innovative Investor: How does the recovery of the G3 countries compare with those of the top 8 emerging market economies?

Giles Keating: The recovery in the 8 largest emerging markets has been extremely robust, and in fact has regained the levels of production seen before the crisis. In the G3, although it is going in the right direction, it is clearly much more cautious. Although things are going upwards, things are still such a long way below where they were before the crisis.

World trade volumes have picked up very, very strongly since the middle of last year. In China and Japan especially there has been a very sharp rebound in exports, and this is about as close to a V shaped recovery as you can get.

The pattern of world trade is changing on both a cyclical and a structural basis. Exports from America are now larger to Emerging Asia than they are to the Eurozone for the first time ever. This illustrates that it is nonsense to suggest the emerging markets are not large enough to play a leading role in the global economic recovery.

Innovative Investor: What are the specific risks to the global economy?

Giles Keating: The banks are still a drag on economic growth, but no longer in a disastrous kind of way. They are one factor to be balanced against others, rather than a dominant force in the way that was the case a year ago. We still have to watch them very closely though. Possibly the biggest upcoming concern over banks is