World economy reliant on lone U.S. engine until next year: Reuters poll

By Andy Bruce

LONDON (Reuters) - The United States will shoulder the burden as main driver of world economic growth at least until the end of the year, while Europe stagnates, Reuters polls showed on Thursday.

This month's survey of more than 250 analysts suggested the U.S. recovery will pick up some momentum in the second half of the year, just as the euro zone economy steadies itself after more than a year in recession.

Reuters will publish its polls on major Asian economies - including China - next week, although news over the last few days has given a fair indication of how those economies will fare in the coming months.

Although the Bank of Japan said on Thursday the world's third-biggest economy was finally recovering, China warned of a "grim" outlook for trade after a surprise fall in June exports - underlining the extent of the mid-year slowdown.

Thursday's Reuters poll showed that's had a direct impact on Latin America's major economies, which are now expected to grow less than previously expected in 2013.

Overall, the global sample of economists revised down their expectation for global growth to 3.0 percent in 2013, compared with 3.2 percent in April's quarterly world economic survey, before picking up to 3.7 percent next year.

It highlighted just how reliant the Western world is on the United States, with Europe in particular beholden to economic and monetary policy there.

For instance, economists from Moody's Analytics point out economic news from the United States has a big effect on German government bond yields, but news from Germany and the euro zone influences U.S. Treasury yields much less.

"This suggests that European investors should follow the U.S. economy closely, and also that U.S. policymakers should understand that what they say affects Europe," said Tomas Holinka and Ashot Tsharakyan, economists at Moody's Analytics.

"Clear central bank communication, well in advance of any change in policy, will be critical."

Euro zone government bond yields, especially among its vulnerable economies in Spain and Italy, have climbed steadily since U.S. Federal Reserve Chairman Ben Bernanke in May hinted it could slow the pace of its stimulus bond purchases.

About half of the Fed's policymakers felt the U.S. central bank's bond-buying stimulus should be brought to a halt by year end when they met in June, but many wanted reassurance the jobs recovery was on solid ground before any policy retreat.

The poll showed the world's biggest economy would pick up steam in the second half of the year, while most economists conclude the Fed will trim back its $85 billion in monthly bond purchases by September.

That echoed results from a Reuters poll of the primary bond dealers taken last week, and also reflects a U.S. financial system that seems to be more resilient.

"The financial wreckage from the Great Recession is less visible today as the passage of time puts the scene of the accident further in the rear-view mirror," said Scott Anderson, chief economist at Bank of the West.

The same can't be said for the euro zone.

The poor health of the banking system was cited as the biggest threat to the future of the euro zone economy, according to the latest poll, followed closely by high youth unemployment.

"The banking system is a problem because it hampers monetary transmission to the economy and the long-term growth outlook is key for investors to regain confidence and to look through short-term volatility," said Elwin de Groot, economist at Rabobank.

As in a similar poll last month, the survey of more than 40 analysts suggested the economy stagnated from April through to June.

That would at least mean the 17-nation bloc has exited a recession that stretches back to the end of 2011, but few economists predict anything other than tepid economic growth from here onwards.

(Reporting by Andy Bruce Editing by Jeremy Gaunt.)