Don't Despair: Global Growth Shows Signs of Health Led by U.S.

The global growth scare that’s gripped financial markets is looking overblown to some economists.

Even as bond yields plumb record lows alongside sliding inflation, the world economy is set to strengthen with the U.S. expansion plowing ahead and cheaper oil, cash and currencies providing lift elsewhere.

Signs of a healthier outlook -- bolstered by central banks rushing to ease monetary policy to prop up prices -- would comfort investors and Group of 20 finance chiefs meeting Monday in Istanbul, even amid the distractions of Greece and Russia. Bank of America Corp. is predicting stocks will outperform bonds this year as reflation takes hold

“G-20 policy makers are concerned inflation won’t turn around, but what’s in the pipeline does look more promising in terms of the growth and inflation outlook,” said Torsten Slok, chief international economist at Deutsche Bank AG in New York and a former International Monetary Fund forecaster.

Slok estimates the world economy will grow 3.6 percent this year, the fastest pace since 2011 and a bit quicker than the 3.5 percent envisaged by the IMF last month when it cut its outlook by the most in three years. At hedge fund SLJ Macro Partners LLP in London, co-founder Stephen Jen is among those betting on a “converge up” scenario in which a resurgent U.S. buoys expansions internationally.