By ANNA TEO

NOT W-shaped but a triple-U. That's the economic scenario Norbert Walter reckons countries might well find themselves in up ahead.

But, for now, there is light at the end of the tunnel, though it's premature to pronounce 'end of recession', whether in the United States or globally, says the Deutsche Bank chief economist.

'I would say that I see the light at the end of the tunnel that other people see, I agree with that, but at the same time I'd suggest that the homogenous perception that the trouble is behind us is not something I share,' he tells BT. 'There will be upcoming trouble in a number of places.'

He cites his own country as a prime example: Germany has had 'dramatic' drops in exports and investments in recent quarters, but still no fallout in employment as yet. 'I don't believe that this can be upheld.'

And when the jobless rate rises, as it eventually will, retail sales will get hit, with repercussions for German GDP. 'And there are a few more cases like that,' he says, citing in particular Spain and Japan.

Prof Walter, who was in town midway through his annual tour of Asia, concedes that he has been a little surprised that Asia has emerged relatively unscathed from the global financial crisis.

'Congratulations to the Asian financial sectors because they avoided being hit by the sub-prime crisis. They were just not owning many of these securities, lucky you!'

He had also been 'convinced' that China would be hit much harder in the economic crisis, but now believes that the country can achieve 7 per cent growth this year.

With 'supportive signals' from Asia, there are now signs of a modest recovery in the global economy, with green shoots in sight.

But, if one has to rely on Western demand for full recovery, 'there will not be vigorous demand increases to be expected anytime soon', says Frankfurt-based Prof Walter.

His forecasts see US economic growth in the next five years falling to an average 2.25 per cent, from a trend 3.75 per cent. The European nations have had a correction of growth trends, with effects that vary from country to country.

'But in practically no case would I suggest that the Western economies stand a chance to grow faster than in the years 2003 to 2007. I believe, on average, the growth trend going forward, in the next five years, will probably be down a full percentage point.'

And that must have repercussions for open, export-driven economies such as Singapore or Hong Kong, he adds.

There's also the question - not just for Asia but all economies - of whether growth will continue into 2011 after the fiscal and monetary stimulus packages have run their course, Prof Walter says.

'Will there be enough endogenous forces to support good growth rates going into 2011? And here I'm not sure. There is this little risk. I have coined a new label - I argued that we might end up, not in a W-shaped situation but in a triple-U shape.'

As he cited earlier, a slump in retail sales and consumption, triggered by rising unemployment, could more than dampen the economy.

Or when fiscal pump-priming ends without as yet any pick-up in private consumption nor investment, he says. 'Or imagine for a second, one or the other central banks increasing short-term interest rates early on.'

All or any of these, even if isolated or cyclical in nature, would hinder growth. 'I don't argue that this would push the economy again into a deep recession, but it would keep it from going into full recovery mode,' he points out.

Prof Walter's Asia tour is longer than usual this year - at six weeks, twice as long - perhaps because it is his farewell call. Known for holding forth on a wide range of issues beyond the economy, he turns 65 next month, and will be retiring from his job as Deutsche Bank's chief economist at year-end - a position he has held since 1990. But, going by his post-retirement plans, one certainly wouldn't have heard the last from Prof Walter the economist.

This article was first published in The Business Times.