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Recovery to start in spring

The economy will start to grow again in the first six months of 2010, financial analysts Davy Research predicted today.

But it said that risks, including fast-rising interest rates, may hinder recovery and noted that recent data had been "slightly disappointing".

Recent surveys of industry and services, such as yesterday's PMI survey of manufacturing managers, indicate that further progress has not yet been made, the analysts said in the first weekly report of the year.


"Core retail sales dipped below the April low in October, although industrial production in the multinational sector remains robust," the report said.

Most analysts do not expect the recession to end until the second half of the year, but Davy still expects the economy to bottom out by March or April. Davy outlined three risks to this more positive outlook: the banking crisis could deteriorate; the global recovery could slip, and interest rates could rise faster than expected.

"The ECB may decide to normalise rates more quickly than the two rate hikes of a quarter percentage point, which we anticipate in the second half," Davy said.